South African REIT sector posts 4.1% gain in May, outpacing equity and bond markets

THE South African REIT sector continued its upward trajectory in May, posting a 4.1% gain, once again outperforming the equity market returns of 3.1% and the 2.7% rise in bonds, said Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments.

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Anderson, compiler of the SA REIT Association's monthly Chart Book, attributed the sector's improving sentiment to 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," said Anderson.

The REIT sector gain in May builds on April's 6.9% surge, bringing the sector's year-to-date return to 6.7% - a recovery from a slow start in January.

While the sector's performance still trailed the broader equity market's gain of 14%, SA REITs had now outpaced the bond market in 2025, signaling renewed investor confidence, he said.

This comes as South Africa’s 10-year government bond yield recently dropped to below 10% for the first time in more than three years.

May saw several REITs reporting their financial results, reinforcing the sector's ongoing recovery: