Investors must be circumspect when it comes to investing in new offshore property companies that are listing on the JSE, with one commentator voicing concern that these counters may be overvalued.
Capital & Regional, a UK shopping mall owner, took up a secondary listing on the JSE yesterday joining the likes of Redefine International, Capital and Counties, Sirius Real Estate, Intu Properties and Stenprop, which offer South Africans exposure to western European listed property.
No fewer than 28 new property counters have joined the JSE over the past four years, which has accounted for about 40% of all new listings on Africa's main bourse since 2011.
Capital & Regional specialises in dominant community retail and leisure centres in towns in the UK and has brought a portfolio valued at about £1bn to the JSE.
The UK’s Capital & Regional financial director Charles Staveley at the main board listing on the JSE on Wednesday.
Photographer: Martin RhodesImage source:
BDliveGroup financial director Charles Staveley said he was confident Capital & Regional would prove to be a good investment for South Africans.
"We are not a fly-by-night. We have been listed for a good 20 years and are exposing investors to dominant community centres," he said.
British and German property assets are delivering enticing returns compared with those in SA. Year-todate, in rand terms, European property funds have realised a return of 27.92% compared with the South African listed property index (Sapy) which mustered 13.26%, according to Catalyst Fund Managers.
Last month, the Sapy's rand return was 0.83%, while European funds returned 4.53%.
But analysts are wary that some Europe-based funds may have become too expensive.
"The listing of Capital & Regional might be suggesting that offshore property companies view South African investors as naïve and/or gullible when it comes to valuations.
"South African investors are quite happy to pay hefty premiums to net asset value for property businesses with above-average earnings growth or perceived high-quality portfolios and development pipelines," Grindrod Asset Management chief investment officer Ian Anderson said.
"I'm not sure there'll be enough support for Capital & Regional among SA's investors to impact its valuation materially, but given how easy it is for offshore property firms in SA to raise equity capital, Capital & Regional may have spotted a great opportunity."
But Evan Robins, listed property manager of Old Mutual Investment Group's MacroSolutions boutique said he felt that compared with other UK property companies, Capital & Regional was not overpriced.
"In the UK universe it is a small company with a secondary quality retail portfolio," he said.
Another UK-based property company looking to appeal to South African investors is International Hotel Group.
The firm has sprung from Redefine International's hotel portfolio and is looking to list this month.
It seeks to invest in newly acquired established hotels and European hotel development projects.
