Return Drivers and Risks in the SA Listed Property Sector

In South Africa the listed property sector is one of the most contentious areas of the JSE. At Lifeforce Financial Services we like to keep abreast of the battle of the bulls vs. bears – without picking a side. We know that everyone has their own investment style.

In the one corner you have the bulls. You may have heard of a “bull market” – this is when people are finding jobs, GDP is growing and the economy is thriving. Bulls are optimistic characters. In the other corner, if a person is pessimistic, believing that stocks are going to drop or that recession is looming he or she is called a bear.

Needless to say, the bears have been soundly beaten by the bulls with property being the best performing asset class, by some margin, in South Africa over the past 25 years.

Yet today, there is still a strong disagreement between the bulls and the bears. What gives?

This imbalance of supply and demand, in addition to record high valuations, need to also be taken in context. South Africa at present is far from a safe, strong and growing economic environment, and property is typically a pro-economic asset class. With record high valuations, what are the risks?

Like to find out more? – click on the link below to download our July Fundhouse update.