A place for residential REITs in the South African REIT market

Abstract

The South African REIT market has grown significantly over the last decade and has consistently produced competitive total returns compared to other international REIT markets. However, the South African REIT market is comprised almost entirely of REITs which are diversified across two or more of the property sectors and is significantly underweighted in terms of its residential exposure when compared to other developed and emerging REIT markets. Until June 2015, no pure residential REIT offering existed. This research attempts to better understand the challenges faced with investment in the residential sector in South Africa and in the establishment of residentially focused REITs. It also attempts to gauge market interest in investing in residential rental stock.