Following a strong performance in April 2025, South African REITs experienced a modest pullback in June 2025, declining by 1% and trailing both equities (+2.4%) and bonds (+2.3%) for the month. However, analysts caution against interpreting the decline as a reversal in fundamentals by pointing to profit-taking in larger counters following an extended period of outperformance.

Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments, and the compiler of the SA REIT Association’s monthly chartbook, says the June 2025 dip appears more technical than structural.

“Many of the more liquid stocks have delivered stellar returns over the past 18 months, so some rotation was inevitable, particularly in a month where global sentiment was otherwise risk-on,” he notes.

While Hyprop Investments, Resilient REIT, and Redefine Properties saw declines of just over 2%, with Growthpoint Properties and Vukile Property Fund edging slightly lower, Accelerate Property Fund delivered a standout performance by gaining 17.8% in June 2025 following the announcement of a R100 million rights offer aimed at enhancing Fourways Mall and strengthening its working capital position.

Despite softer price action, operational performance remained strong. Fairvest Limited, Stor-Age REIT, and Vukile Property Fund’s June 2025 results showed solid progress, with all three projecting mid-to-high, single-digit growth in distribution income through FY2025 and FY2026.

“These are healthy forecasts and suggest the dividend growth story has further to run,” says Anderson. “In fact, we are starting to see early signs of renewed access to equity capital, as evidenced by Spear REIT’s successful R749 million raise.”

Fortress Real Estate Investment Limited’s resumption of dividends has also contributed significantly to year-to-date growth. Looking ahead, the outlook for lower interest rates remains supportive, with a strong rand and lower oil prices bolstering expectations for a rate cut by SARB.

“Rate cuts would further reduce funding costs, underpin valuations, and support income growth into 2026 and beyond,” he adds.

Sector valuations remain attractive, and dividend momentum continues to anchor investor confidence in the medium term. The return to high single-digit dividend growth for the sector underpins current valuations, and if these growth rates are maintained into 2026 and 2027, they should provide significant capital upside for investors.

“Improving property fundamentals, lower official interest rates and access to capital at reduced costs all support stronger distributable income growth in the medium-term,” he concludes.