Warehousing set to be hot property

Fund managers expect local and foreign landlords to increasingly invest in warehousing and distribution centres over the next few years so they can position themselves for the growth of online retail.

Offshore-based industrial property funds may also potentially look at listing in SA where investors are wanting more choice when it comes to listed property investments.

Only about 2% of retail sales in SA occur online, according to research by Arthur Goldstuck of World Wide Worx, but this will increase exponentially as infrastructure improves and data costs drop.

“I would think most large diversified real estate investment trusts [Reits] would want to have some exposure to industrial property, particularly on the higher-quality logistics and warehousing front,” said Ahmed Motara, an analyst and portfolio manager at Stanlib.

He said listed property CEOs were likely to be cautious before spending capital in a slow economy. However, new acquisitions and developments would most likely be made with a longterm view in mind.

“Right now it’s hard to be overly bullish about the SA listed property sector’s short-term returns. We are waiting to see the possible outcomes for growth post the national elections in May,” he said.

Equites Property Fund, which is the only industrial specialist fund on the JSE, has been a successful performer since it listed four years ago. The company has grown its portfolio from R1bn to about R10bn and each year has achieved a total return of about 25%.

Evan Robins, a portfolio manager at Old Mutual Investment Group, said there is limited industrial property and investors need to wait as new stock is built. He expects industrial property to dominate new developments over time.

“It takes time to build up a portfolio of any property type. I think investors must be patient,” said Robins. He said property group Fortress was developing Clairwood Logistics Park after waiting for years to acquire the land for the asset.