Advertise Here
Icon

Directory

IconAlternative Investments
IconAsset Managers
IconAssociations and Institutes
IconBBBEE Consulting and Verification Agencies
IconConsumer Protection
IconCorporate Governance
IconCredit Bureaus
IconFinancial Planners
IconInvestment Consulting
IconLinked Investment Service Providers
IconListed Equities
IconOmbud
IconOnline Share Trading
IconParticipation Bond Managers
IconProperty Unit Trusts
IconPublications
IconRegulatory Authorities
IconStock Exchange
IconUnit Trust Fund Managers
IconWellness Programs
Advertise Here
  Subscribe To »

Listed property upgrade on the way - STANIB

Published

2006

Mon

24

Jul

 
LISTED property may have suffered substantial damage as an investment option, but further big knocks in the coming weeks are unlikely and an upgrade is on the cards. The positive perspective comes from Mariette Warner, head of property funds at STANLIB, South Africa’s largest unit trust company. At one stage in recent weeks, 22% was knocked off values in the listed property market, but those who took the full impact have more to gain by sitting tight than moving out, says Warner. She explains: “Sitting tight is a smart move when a sell-off has been overdone. It’s too late now to head for the exits. The major damage started after May 10 when the flight from the category began. “When a market loses a fifth of its value in a few days, there are usually bargain opportunities in the immediate aftermath.” According to STANLIB’s listed property specialist, the suspicion that good value now exists in listed property was confirmed in early July when signs of institutional buying became apparent. Warner is not unduly concerned that the Reserve Bank’s Monetary Policy Committee meets again in early August – another opportunity for a rate rise, always bad for property. She notes: “If logic prevails, even two more 0.5% rate rises would cause a wobble rather than a freefall. “History suggests the 22% loss after a relatively modest rise was a significant over-reaction.” In March 1998, the prime rate went up 3% and listed property declined by 35%. In June 2006, rates went up by just 0.5% yet listed property retreated by an apparently disproportionate 22%. Mariette Warner adds: “That is either blind panic or most of the bad news of further rate rises in 2006 has been priced into the market well ahead of time. “My conclusion is that limited downside risk is counter-balanced by solid upside potential. So, if you’ve already taken the pain, why not hang around for the gain?” Time in the market appears to be a good antidote to any pain. The major bull-run in listed property began in October 2002. From that time until May 10, capital values rose by 180%! Long-term listed property supporters are therefore net winners despite recent weakness. Another category of investor also seems certain to keep their faith in property – long-term thinkers who look for steady income bolstered by growing rental streams. These investors tend to regard capital growth as a bonus rather than the prime motivation for investing. Warner says they appreciate that capital volatility is an inherent risk in this market. Listed property may have taken a knock, but its strategic role as a risk-diversifier in a balanced portfolio is undamaged. Furthermore, some hard-headed market factors appear to put a solid ‘floor’ under listed property for some months to come. Warner points out: “The forward yield for the next 12 months is 9%, a tad higher than bonds and a lot higher than cash left on call at the bank. “Over the next year, a recovery is more likely than another crash and there is reason to believe listed property will outperform both equities and bonds.” However, she cautions listed property fans not to expect outperformance to last forever.
 
Source: Clear Distinction
 
« Back to previous page Print this page » |
 

Breaking News »

FNB announces TaxTim as a new eBucks Rewards partner

FNB has announced a new partnership with online tax solution firm TaxTim, the latest partner to join its eBucks Rewards programme. FNB and RMB Private Bank customers can now earn up to 50% of the cost of their ...
Read More »

  

Want to withdraw retirement funds on emigration? National Treasury and SARS say try again in 3 years' time

            by Joon Chong, Partner & Wesley Grimm, Associate at Webber Wentzel   The National ...
Read More »

  

Why female investors are on the rise

Research shows that certain gender-based qualities give women a natural advantage in long-term investing. Stonehage Fleming Investment Management in South Africa reported a 35% rise in female investor clients over ...
Read More »

  

SOUTH AFRICAN WOMEN’S INDIVIDUALISED FINANCIAL JOURNEY

Balancing work and home life has always been challenging, but our new normal has had an even greater impact on our personal lives, affecting our families, livelihoods, well-being and health. As women in South Africa, ...
Read More »

 

More News »

Image

Healthcare »

Image

Life »

Image

Retirement »

Image

Short-term »

Advertise Here
Advertise Here

From The Glossary »

Icon

Catastrophe (life):

Total claims on a long term insurer arising out of a single catastrophic event (e. g. fire, earthquake, storm, explosion or similar event).
More Definitions »

 

Advertise

 

eZine

 

Contact IG

 

Media Pack

 

RSS Feeds

By using this website you agree to the Terms of Use.
Copyright © Insurance Gateway (Pty) Ltd 2004 - 2020. All Rights Reserved.