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Jul 15, 2008:
In a world arena where transparency is increasingly valued, the SA commercial property sector now holds the 21st position in the Jones Lang La-Selle Transparency Index for 2008.
The index, which is published every second year, includes developing as well as developed property markets. SA was 13th on the list in 2006.
Anton de Goede, property analyst at Coronation fund managers, says the country is probably lower down on the list as the number of markets being measured, increased from 56 to 82 during the last two years. "Another reason is SA's relative positioning in the new categories."
The transparency of the markets in the index is measured by taking performance, underlying market principles, listed instruments, die regulatory environment and transaction processes in to account. Occupiers, debt financing and valuations have been added over the last two years.
He says SA still leads the developing markets, which is good news for foreign investment.
The first three positions are held by Canada, Australia and the VSA, while Sudan, Cambodia, Algeria and Syria are regarded as the most non-transparent.
Dubai, Russia, Romania and the Ukraine are the markets that have made the most progress as far as transparency is concerned.
De Goede says the rise in the markets in which transparency is measured, can be attributed to globalisation. "The movement of capital across the world has increased the demand for information regarding other markets."
It also serves to encourage governments to eliminate the bureaucratic red-tape which impedes the free flow of capital.
He says investors are therefore looking out for other markets with potential for higher returns in order to diversify. He says interest from investors from the US and Australia is especially aimed at foreign listed property investments, while the Middle East and Germany are investing in direct property.
Developing markets are however not without risk. He says the SA property sector is burdened by an inherent political risk, macro-economic instability and a exchange rate risk. "Investors are expecting higher potential returns in order to compensate for these risks."
Figures by the South African Property Index, which was issued earlier this year by the South African Association of Property Owners (SAPOA) in consultation with the Investment Property Bank (IPD), indicate that the country's commercial property sector performed the best in the world in 2007 with total returns (income and capital) of 27,7%. – Elma Kloppers, Sake24
