Reits cushioned from Brexit

BRITAIN’S decision to leave the EU is unlikely to have any major impact on its own on the South African property market.

Laurence Rapp, the chairman of the SA Reit Association, which comprises most of the JSE-listed property sector, believed that for South African real estate investment trusts that were invested in the UK, Brexit and all the other political moves made for an interesting investment climate.

But Rapp stressed there was political change in all corners of the world and the implications of Brexit should not be considered in isolation. He said a third of the income of South African Reits came from international property and the more global they were, the more aware they needed to be of economic and political issues.

John Loos, a household sector and property strategist at FNB, said Brexit on its own was not a major event but there was a need to look at the bigger picture because it was symptomatic of a wave of protectionist spirit that was sweeping the world.

Loos said Brexit and Donald Trump in the US presidential elections victory were signs of this and did not believe they were the last events of this nature.

He said the perception of Europe was of a significant amount of resentment to open borders and the free movement of people.

“If the world continues on this protectionist path it has negative implications for the global economy in the longer run and commodity prices, the African economy and property market. But I’m not convinced that Brexit on its own will have a major impact on the African continent,” he said.