There’s a silver lining for South African real estate investors despite ongoing turbulence in global markets.

Ian Anderson, head of Listed Property and portfolio manager at Merchant West Investments and the compiler of the SA REIT Association’s monthly Chart Book, highlights that the local REIT sector is in a far stronger position today than it was five years ago.

Anderson contrasts the current environment with the sharp downturn the sector faced during the Covid-19 pandemic. “The current turmoil in global financial markets comes almost exactly five years after the last major drawdown for South Africa’s listed property sector, when the South African economy was shuttered at the start of the pandemic.

“Between March 2017 and March 2020, South African REITs, on average, lost more than 70% of their value. In the years since, the sector has clawed back nearly 68% in value (excluding dividends), though it remains more than 50% below March 2017 levels.”

With fresh waves of political and economic uncertainty gripping global markets, many investors are wondering if history might repeat itself. Anderson, however, reassures them.

“Large drawdowns from current levels are highly unlikely,” he said, citing several key factors. First, South African REITs are now trading at significant discounts to their net asset value, a stark contrast to the premium conditions at the end of 2017.

“Second, the sector has focused on strengthening balance sheets in the post-pandemic years through lower payout ratios, strategic asset recycling, and timely equity capital raises. This has helped reduce loan-to-value ratios across most of the sector.

While economic growth may be sluggish or even negative, Anderson points out that the context is vastly different from 2020. “Economies remain open, tenants continue to trade, and rents are being paid. That’s a far cry from the conditions during April and May of 2020,” he said.

However, Anderson cautioned that short-term volatility is likely to persist, particularly with global headlines dominated by geopolitical tensions and trade disputes, especially between the United States and China.

Beneath the noise, property fundamentals in South Africa continue to improve. “Companies that reported results in March, including sector heavyweight Growthpoint Properties, all reported improved trading conditions in their South African portfolios,” Anderson said.

Growthpoint, for instance, has revised its guidance upward, shifting from a decline in distributable income per share (DIPS) to expected growth between 1% and 3% for the year ending June 2025.

The company also saw a 6.2% increase in South African net property income for the six months to December 2024, while the V&A Waterfront recorded a remarkable 16.6% surge in like-for-like net property income, driven by increased tourism.

Other REITs are showing positive momentum too. Resilient exceeded its dividend guidance with a 7.5% increase in comparable net property income, while Hyprop Investments delivered improved results and raised its dividend payout ratio thanks to a healthier balance sheet.

Although 2025 has so far been more subdued than 2024, Anderson remains optimistic about the sector’s future. “The improving property fundamentals in South Africa continue to point towards a return to net property income and dividend growth for the sector over the next 2 to 3 years,” he said. “Investors should not lose sight of that.”

In Anderson’s view, the South African REIT sector is not only stronger than it was five years ago—it’s better positioned to navigate the uncertainties that lie ahead.