South Africa’s REIT sector continued its upward trajectory in May 2025, posting a 4.1% gain – once again outperforming the equity market (3.1%) and bonds (2.7%).

This latest increase builds on April 2025’s 6.9% surge, bringing the sector’s year-to-date return to 6.7% – a significant recovery from the slow start in January 2025.

While the sector’s performance still trails the broader equity market’s 14% gain, SA REITs have now outpaced the bond market in 2025, signalling renewed investor confidence and following South Africa’s ten-year government bond yield having recently dropped to below 10% for the first time in more than three years.

Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments, and compiler of the SA REIT Association’s monthly Chart Book attributed the sector’s improving sentiment to several key factors.

“The positive outlook is largely driven by expectations of lower interest rates in South Africa, a small reprieve in global tariff tensions, and growing evidence that property fundamentals are strengthening. These trends set the stage for higher distributable earnings growth across the sector in 2025 and 2026.”

May saw several REITs reporting financial results, reinforcing the sector’s ongoing recovery including Redefine Properties with its interim results for the period ended February 2025 reporting revenue up 3.5% and distributable income per share rising 0.7%. The REIT’s full-year guidance was maintained, with expectations that distributable income per share will range between 50 cents and 53 cents – representing growth of between 0% and 6%.

Equites Property Fund delivered full-year results in line with market expectations, increasing distributions by 2.1% to 133.92 cents per share. More notably, guidance for 2026 far exceeded consensus forecasts with anticipated distribution growth between 5% and 7%, driven by strong rental growth and a high-quality logistics portfolio following two years of asset recycling. Equites emerged as the top-performing REIT in May 2025 with its share price rallying 10%.

Spear REIT also benefited from robust results as its Western Cape-focused strategy continues to drive growth. The company reported a 9% share price increase following its full-year results for the financial year ended February 2025. The company also announced its acquisition of Berg River Business Park in Paarl for R182.15 million in an all-shares transaction.

Other REITs reporting results in May included Burstone, Delta Property Fund, Dipula Properties, Emira Property Fund, and Octodec Investments, all with a common theme emerging – property fundamentals in South Africa are improving across all sub-sectors, reinforcing investor confidence.

With investor confidence steadily rising, the market capitalisation of the SA REIT sector has now surpassed R250 billion – marking the first time since January 2020 that it has reached this level.

“With further interest rate cuts a possibility, stabilising macroeconomic conditions, and improving company guidance, investor optimism remains strong. This momentum is likely to carry through the remainder of 2025,” he says.