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Wednesday, 13 July 2011 04:00

The property sector's Market Cap increased 70% in the two years prior to the launch of REITs R230bn, after a rush of merger, acquisition and new listing activity and a strong rally in property share prices, and with upto 30 property companies preparing to list the short-term future looks just as bright. Technically, unitl 1st May 2013 there were no REITs in South Africa, but for the previous 6yrs it did have some legal structures that were close: Portfolio Unit Trusts (PUTs) which could hold a portfolio of investment-grade properties and are listed (governed by the Collective Investment Schemes Control Act of 2002), are managed by a management company and generally invest in shares of property companies. They can (but usually don't), invest directly in real estate properties, and the income they distribute to unit holders is not taxable (but any income they do not distribute is), and there are no minimum distribution requirements. The unit trust may choose to keep as much income as it's willing to pay taxes on. A PUT cannot have more than 30% debt on the value of their underlying assets.

The South African market capitalisation of local listed property companies is more than R200bn / USD$21.5bn (early-2013).

South African listed property has a market capitalisation of some ZAR250bn / $26bn. In 2014 it is likely to become the 8th largest REIT market globally with around 26 REIT entities & potentially more to come (mid-2013).

Only 2% of investment-grade residential property in SA is listed, whereas about 14% of developed markets and 15% of developing markets’ residential properties are listed (late-2014).

Last Updated on Thursday, 30 October 2014 07:13