Property stocks fall on rate doubts

The South African listed property index (J253) lost 4% last month as investors offloaded stocks on weak global markets and due to uncertainty about the local interest rate outlook, a new survey showed on Thursday.

Listed Property Sector Monthly Overview, compiled by Cape Town-based Catalyst Fund Managers, showed that the property loan stock index (J256) fell 3,38% and the property unit trust index (J255) slumped 5,27% in March.

During the month the recorded CPIX and PPI figures were higher than the consensus expectations, and inflation continues to remain outside the inflation target band of 3% to 6%.

The capital markets provided little support for the SA listed property sector with the R157 long bond yield weakening from 9,17% to 9,24% during March, Catalyst said.

Uncertainty in the macro environment coupled with the current corporate activity may lead to volatility in listed property share prices in the short term, Catalyst said.

Corporate activity has characterised the SA listed property sector for numerous months. At the end of March, 11 out of 25 funds were trading under cautionary announcements relating to merger and acquisition activity.

Catalyst noted that listed property companies continue to record good distribution growth, and that commercial property fundamentals remain favourable.

"Over the long term, distribution growth will drive the performance of the SA listed property sector," the fund mangers said. – I-Net Bridge

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