Cracks start to show

Investors should brace themselves for lower dividend growth — but total returns may yet surprise on the upside

Property investors who expect to see their annual dividend payouts increasing by the usual 8%-12% may be in for a rude awakening. For the first time in years, property funds that have built up portfolios of SA shopping centres, offices and industrial premises are starting to report flat or even negative dividend growth.

Last week it was the turn of Tower Property Fund, which reported a 16% drop in dividends for the 12 months to June. Next week Emira Property Fund is expected to report a 2.6% fall for the same period. Meanwhile, Accelerate Property Fund recently warned that its dividend growth would be flat for the next two years. Delta Property Fund also expects zero dividend growth for its 2018 financial year, down from a previous forecast of around 5% growth.

Others, including Liberty Two Degrees, Redefine Properties and Dipula Income Fund, have recently downgraded their growth forecasts for their 2017 financial years.

It’s all looking rather grim. Zayd Sulaiman, investment analyst at Catalyst Fund Managers, says it’s possible that more funds may yet surprise the market on the downside when they