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Property Talk

Property Talk

Date: 2015-01-16

Property as an asset class dominated in 2014. Moneyweb recently published an article on the top performing unit trusts for 2014 and eight of the ten are property funds. Listed property was the definitely the place to be invested in during 2014. The top performing unit trust was the Sanlam India Opportunity Feeder Fund providing an annual return of 39,69%. The Indian equity market was the world's top performing investment destination during 2014.


The second highest returning unit trust and the leading property fund is the Absa Property Equity Fund which returned 39,67%. Of the property funds in the top ten list, some are domestic property funds such as the Absa fund which invest in local property stocks while others such as the Grindrod Global Property Income Fund, which returned 34,62%, are focused on international property investments in the US, Europe, the UK and Australasia. The worst performing unit trusts were headed by the Momentum Value Fund which lost 15,91%, and was followed closely by the Momentum Resources Fund which lost 15,85% - not a great performance by that asset manager.


Funds focused on resources showed dismal performance as the resources sector underperformed. Falling oil prices have definitely helped our local economy, unless you work for Sasol or hold Sasol shares. At below R400/share many people are buyers of Sasol as they see the longer-term potential of this incredible company on the global market - as long as their expectations of a recovering oil price become a reality. I like the idea of oil at less than US$40 per barrel and our fuel prices heading south. Our fuel prices have dropped 18% over the past three months. Magnus Heystek recently reported that we should take advantage of this windfall and raise the fuel levy by R1 per litre. As South Africans use approximately 25 billion litres of petrol and fuel per annum, that would mean a significant R25 billion per annum into government coffers - not a bad idea.


We will have to see what our minister of finance comes up with in the forthcoming national budget. An interesting article published by Bloomberg recently entitle "How $50 oil changes almost everything", says that the recent collapse in energy prices is shifting wealth and power from autocratic petro-states to industrialized consumers. A calculation of the impact on GDP growth rates across various countries with a change in oil prices from $84 a barrel to $40, puts South Africa third on the list of countries most in line to benefit with an over 1% increase in GDP growth rates. The two biggest loser countries are Saudi Arabia and Russia

Apart from the excellent yields provided by the listed property sector, there were stars such as Santova Logistics, which delivered a return of 147%. So although the general equity market may only have delivered a return of 7% last year, certain sectors provided exceptional returns. The same often results with physical property investments as well. You have got to know where to look and how to time your investment correctly.


For further information and an interactive analysis of this article follow my blog: andreaswassenaar.blogspot.com.