Listed op­por­tu­ni­ties

Finweek English Edition - - INVESTMENT -

South Africa’s l isted prop­ert y sec­tor is now in con­sol­i­da­tion mode fol­low­ing a f l ood of new ent r a nts f rom 2010 t hrough to 2013. Since 2010 some 17 new property play­ers l isted on the JSE’s main board and the AltX. The sec­tor’s mar­ket cap­i­tal­i­sa­tion grew to R188bn at the end of 2013 from R117bn at the end of 2010. Cur­rently the sec­tor is val­ued at around R181bn.

The trou­ble now, how­ever, is that many of the listed play­ers are small and there­fore carry with them an el­e­ment of con­cen­tra­tion risk ei­ther on a par­tic­u­lar ten­ant or node. There are also other is­sues at play, mak­ing it hard for these funds to make a sig­nif­i­cant im­pact on the mar­ket.

Keillen Ndlovu, head of l i sted property funds at Stan­lib, says that mar­ket dy­nam­ics have changed over the last eight months or so, mak­ing the en­vi­ron­ment more chal­leng­ing for smaller property funds. This pre­sents an op­por­tu­nity for the large play­ers to ac­quire the smaller play­ers and in the process di­ver­sify while bring­ing on board new ex­po­sure.

Nesi Chetty, head of property at Mo­men­tum As­set Man­age­ment, says that con­sol­i­da­tion is a key theme for the sec­tor this year. This will likely re­sult in an im­prove­ment in liq­uid­ity in the sec­tor, and in­ef­fi­cient com­pa­nies will ei­ther be re­struc­tured or stripped of as­sets.

The price-to-book val­u­a­tion of the sec­tor has been ex­pen­sive from 2012


Nesi Chetty

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