The offshore property counter across the JSE has now reached to the count of eight and hence the SA property investors can now deal with the offshore property.
Before five years, the former Liberty International was the only option available for the investors who were interested in buying offshore property.
Many South African property investors have brought overseas real estate portfolios to the JSE, among which the latest is Investec’s Australia-focused property fund listed in last month. This brought the count of offshore property counters to eight.
The African Land Investments, first for the JSE is expected to be listed by the end of 2013. Since last 12 months, the offshore property stocks have became one of the biggest money maker among JSE, no doubt based on the weaker rand and hard currency value.
Over the past year, the share price of Capital & Counties Properties, albeit primarily a capital growth is up 75% while that of New Europe Property Investments (Nepi), MAS Real Estate, Redefine International and Rockcastle Global Real Estate Company have revived up to 70%, 61%, 45% and 44% respectively.
Grindrod Asset Management chief investment officer Ian Anderson says, the investors should not expect these super returns for the next 12 months, but its not yet too late to buy the offshore property stocks. However there are some risks due to the changing currency value just because of weakening rand value in short term.
But here Andersons warns at one thing that the offshore focused property stocks like the SA counterparts are truly susceptible to the changes in the bond yields and interest rates.
Which stocks to buy depends on the heights of the risks taken from your side and also on your interest of growth i.e. yield or capital growth and your extents of investments.
Investec Australia Property Fund, which is yet a smaller player with a portfolio of only eight offices and industrial buildings has already gone through a price hike of nearly 8% since listing past two weeks. At current stage of R11 the counter offers an attractive output of around 8% in Australian dollars.
According to Anderson at this stage the investors are taking a chance based on the track record of the Investec Property management team who were successfully listed the SA based Investec Property Fund in April 2011 and are having experience in offshore property markets.
Nepi, the Romanian focused property arm of the Resilient group, is currently trading at a forward yield of around 4.8%. Jay Padayatchi, the Meago Asset Managers said that though Nepi looks expensive at first view, but the stocks are still reasonably quite attractive and are priced such that they give exceptional development of R3bn. The latter is giving the output of 9% to 10% versus debt funding costs of less than 5%. Along with this Nepi is also expected to deliver dividend growth in euros of around 15% per year for atleast next three years.
Padayatchi says that investors who wants to invest in the expanding African commercial real estate markets should take in consideration Rockcastle and soon to be listed African Land Investments. Rockcastle also in the Resilient stable, has seen its market growth from less than R1bn when it listed in July last year to R6bn currently. While the counter is trading at a forward yield of around 6%.
Rockcastle recently announced that they are planning to acquire stakes in three shopping centres in Zambia, though Rockcastle is invested primarily in global listed Reits.
Padayatchi further said that “Rockcastle is ready to enter Africa as it quite substantial and also have easily raised R1.2bn in an oversubscribed private placement before few weeks.” The African Land Investments potentially has a higher risk profile, as initially it will only have one shopping centre- Manda Hill in Zambia.
Redefine International which owns a R15.8bn portfolio in UK, Germany, Switzerland and Australia is also looking for developing more and deliver stronger income growth numbers.
Mohamed Kalla, Sesfikile Capital says that Redefine Properties is still at an attractive pricing giving its forward yields of 6.6% compared to 4%-5% yields at its UK listed trading peers.
