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Amid mounting global financial pressures, Terebinth Capital claims that South African listed property presents a prime chance for investors to capitalize. Unprecedented monetary tightening since 2022 has made accessing funds more difficult across numerous advanced economies. Inflation exceeded targets set by central banks, forcing stringent monetary policies to stay up longer than expected.
This escalated cost of capital has turned the benefits of low-interest rates into a headwind for global property owners. As a result, valuations and earnings of listed property companies worldwide, including South Africa, have hit a snag. However, Terebinth suggests that this period represents a favorable point of entry for investors considering the potential return prospects.
South African real estate has been slowly rebounding since the COVID-19 lockdowns. Stabilizing vacancy rates and continuous growth of normalized net property income in the mid-single digits reflect a promising situation despite the escalated cost due to power outages.
As these companies have hedged most of their interest rate exposure, the stock sector rating is expected to significantly improve once the market begins factoring in this normalisation.
Moreover, offshore diversification proves to be another beneficial aspect of the SA-listed property landscape, with about half of these companies having direct or indirect foreign exposure, adding an additional buffer for potential risks.
Terebinth Capital remains confident in its approach to seize the opportunities presented at this phase of the economic cycle, believing that the exposure to listed property will be a noteworthy differentiator in the return drivers of multi-asset funds.