Global context outlined by Patrick Sumner at SAPOA convention

While generally positive about listed property in South Africa, he spotlights economic threats and liquidity as disadvantages that need to be addressed.

South Africa's listed property is recognised globally for its conservatively and professionally-managed portfolios and diversity of property types, he says, but the macroeconomic challenges - notably currency and liquidity risks - mitigate the sector's generous yields.

Right now, global listed property investors are looking for sustainable dividend growth, development exposure in selected markets and total returns in the 10-12% range.

"We see value in US small and mid-cap REITs where we expect average dividend growth of around 10% in 2013 and 2014, on the back of improving economic fundamentals, low interest rates, access to equity and low construction levels," he elaborates.

The new tax dispensation in South Africa, implemented on 1 May 2013, is expected to align South African listed property vehicles with internationally recognised Real Estate Investment Trusts (REITs). Indeed, if all listed property companies in South Africa seize the opportunity to convert to REITs, South Africa could be the 8th largest REIT market in the world.

Sumner agrees the new dispensation will create new opportunity for the sector as it brings South Africa in line with other jurisdictions. "However, things will only improve if the growth prospects and liquidity improve."

The 45th annual SAPOA International Convention and Property Exhibition will take place on 14-16 May 2013 at Sun City.

For more information, go to www.sapoaconvention.co.za.