Property's Time To Shine Again?

Last year was a dismal one for the listed property sector – both locally and globally. But there are strong signs of a turnaround, and potential for further recovery in the sector going forward.

- Maarten Mittner

The two local bellwether property indices have both risen above the benchmark 200-day moving average trading pattern since the start of the year, offering hope to investors in the beleaguered sector that a turnaround is happening.

There has been a number of previous breakouts from the moving average since the highs of January 2018. However, they were marginal, and further pullbacks materialised thereafter. But this breakout could prove to be more sustainable.

The move has been more pronounced in the All Property Index (the ALPI or J803), which provides for a broader global exposure and was introduced in October 2018. The traditional SA Property Index (the SAPY or J253) was trimmed down to a more local exposure amid a myriad of challenges, ranging from concerns around expropriation without compensation to higher interest rates in the US, low economic growth prospects in SA, and the negative Viceroy report on Resilient and its linked companies.

Good news for investors is that the bombed-out UK property sector, with the likes of Capital & Counties, Hammerson and Intu, is also seemingly in recovery mode. This is based on optimism that the UK could escape a chaotic no-deal Brexit scenario, which has supported the pound lately.