SA REITs Outperform Equities and Bonds in October Amid Favorable Fiscal Updates

South African real estate investment trusts achieved a total return of 2.4% during October 2026, surpassing both the broader equity market and bond indexes to extend their performance lead for the year. According to the SA REIT Association Chart Book compiled by Ian Anderson of Merchant West Investments, the sector has managed to outpace equities in four of the last five months despite the ongoing market absorption of the September repo rate increase. Property investors and market participants navigating leasing and capital allocation decisions will note that strong balance sheets and continuous investor backing have provided vital insulation against macroeconomic volatility, supported further by constructive fiscal disclosures in the Medium-Term Budget Policy Statement.

Macroeconomic Indicators and Yield Movements Shape Sector Spread

The performance of listed property was reinforced by a retreat in long-dated bond yields both locally and across developed markets throughout October, while the local bond market received an additional boost from the Medium-Term Budget Policy Statement tabled on 21 October. National Treasury reported that government debt peaked at 78.4% of gross development product for the 2025/26 period, with tax revenue running R17.1 billion ahead of previous estimates. Treasury reduced weekly fixed-rate bond issuance by R600 million to R1.95 billion and introduced a bond buyback initiative, driving the benchmark 10-year government bond yield down by 12 basis points. Consequently, the long bond yield tracked in the Chart Book dropped from 8.92% to 8.72%, while the forward yield shifted from 7.03% to 7.13%, shifting the yield spread relative to bonds from -188 basis points to -159 basis points against a five-year average of -181 basis points.

Interim Financial Results Reflect Robust Operational Health

Corporate reporting during October highlighted sound operational metrics across multiple listed portfolios, with Spear delivering distributable income per share growth of 8.02% to 47.29 cents and raising its full-year distribution guidance to between 9% and 11%. Spear recorded industrial reversions of 13.49% alongside a 96.6% occupancy rate and a conservative loan-to-value ratio of 21.91%. Similarly, Equites reported a 5.1% increase in its interim dividend to 72.57 cents alongside a South African like-for-like rental growth figure of 5.3% and a portfolio valuation uplift of 2.8%. Equites successfully lowered its loan-to-value ratio from 35.1% to 28.1% following the £200.5 million sale of its Aviva portfolio, while concurrently committing to seven active construction projects valued at R2.4 billion with initial yields ranging between 8% and 9%.

Capital Deployments and Portfolio Restructuring Drive Market Activity

Activity on the transactional front saw substantial capital allocations and restructuring initiatives, led by Spear taking transfer of R1.4 billion worth of new acquisitions at a blended yield of 8.99%, including the Tygervalley office precinct and the Watergate Centre in Mitchells Plain. Equites deployed temporary sales proceeds into United Kingdom logistics holdings while completing R650 million in debt capital market fundraising at tight spreads. Redefine finalized the restructuring of its Polish retail joint venture, the Horse Group, enabling its partner to exit for €150.8 million by March 2027 and securing a predictable cash return on its €50 million interest. Meanwhile, Fairvest successfully upsized an accelerated bookbuild from R500 million to R1.25 billion at 675 cents per share, and Oasis Crescent maintained its position at the head of the year-to-date performance leaderboard with a 36.4% return while advancing the redevelopment of Sacks Circle into a logistics facility.

Source: SA REIT, 2 November 2026.

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