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De Klerk was speaking earlier this month in New York at a National Association of Real Estate Investment Trusts (Nareit) forum‚ where the overriding message was that most Reit (Real Estate Investment Trust) managers were upbeat about the prospects for the listed-property asset class over the next two years‚ despite the economic malaise in Europe and concerns about global economic growth.

In the US‚ Reits have also outperformed other asset classes.

SA’s property loan stocks are similar to Reits. However‚ Reit legislation has been earmarked for finalisation in SA next year‚ according to the Property Loan Stock Association of South Africa. Adopting a Reit structure will bring SA in line with the rest of world.

De Klerk heads the Property Loan Stock Association’s Reit Committee.

“The internationally recognised Reit structure exists in countries such as the US‚ Australia‚ Belgium‚ France‚ Hong Kong‚ Japan‚ Singapore and the UK. Introducing this structure will bring South African listed property investment in line with international norms‚” De Klerk was quoted saying in Business Day last week.

The PLSA has been working with the Treasury for more than five years to formalise Reit legislation in SA. It has said that neither of the existing structures — property loan stock or property unit trust — offered the uniformity and simplicity to facilitate international investment.

In addition‚ there has been some potential for tax uncertainty‚ which is in itself enough to deter some international investors‚ the organisation has said.

Several speakers at the Nareit forum highlighted expectations that the lower interest rate environment would continue for longer‚ and this was good news for the sector‚ De Klerk said.

Ian Anderson of Grindrod Asset Management‚ who was also at the event‚ said: “Reits have undergone a significant metamorphosis since the credit crisis. Most companies have taken the opportunity to improve both their property portfolios and balance sheets.”

This made them attractive to both local and foreign investors seeking the higher yields and predictable cash flows on offer in a low return and low interest rate environment‚ he said.

“Publicly traded Reits are now the recipients of notably cheap capital – both debt and equity. This allows them to continually improve the quality of their portfolios and generate substantial shareholder value over the medium term‚” Anderson said.

Even with limited economic growth‚ the scarcity of new supply‚ which had characterised the global property landscape since the credit crisis‚ was providing the ideal backdrop for falling vacancy rates and increasing rentals‚ he said‚ adding that this was visible in supply-constrained markets like Manhattan‚ where rentals had recovered to pre-crisis levels.

Anderson said that current yields available on global Reit securities‚ while low in absolute terms‚ compared favourably with yields on other asset classes‚ like bonds and cash.

“Some exposure to global real estate should be part of a balanced portfolio‚ where investors should expect yields of between 4% and 5% and growth in income of between 3% and 5% yearly‚ over the next three to five years‚” Anderson said.