The real estate investment trust (Reit) sector in South Africa outperformed the country’s equity and bond sectors in April. While the Reits gained 6.9%, equities rose by 4.3% and bonds by 0.8%. Trading in the Reit sector was robust, with turnover exceeding R12.2-billion, which was the highest level so far this year. These figures were achieved despite trading being disrupted by the public holidays during the month.

“This was a sweet month for the sector,” affirmed SA Reit Association monthly chart book compiler (and Merchant West Investments head of listed property and portfolio manager) Ian Anderson. “The sector continues to offer value, trading at historically high discounts to net asset value which excludes the Covid-19 period.”

The Reit which recorded the greatest gain, with a return of 15.3%, was SA Corporate. It was followed by Attacq at 13.3%, Resilient at 10.9% and Redefine Properties at 10.5%.

“There was little company-specific news to drive these moves, but a more favourable macroeconomic and political backdrop certainly played a role,” he pointed out. “Lower interest rates not only support property valuations through reduced discount rates but should also lift distributable income growth across the sector in 2025 and 2026, especially with average loan-to-value ratios sitting between 35% and 40%.”

Because consumer price inflation fell below the South African Reserve Bank’s (SARB’s) lower target figure last month, there were stronger expectations of an interest rate cut by the Monetary Policy Committee, at its upcoming meeting this month.

Inflation, he observed, was likely to remain muted, owing to a stronger rand and weaker oil prices. This would give the SARB the space to further cut interest rates. Consequently, the market was expecting at least one further rate cut, later this year. Another piece of good news had been the suspension of the 0.5% increase in Value Added Tax. This increase had been proposed in the Budget speech, but encountered strong opposition from both within and without the Government of National Unity.

South African Reits also benefitted from improving sentiment on global markets. This improvement was largely owing to reports of an easing in US-China trade tensions, and to US President Donald Trump delaying the imposition of tariffs on a number of countries.