Is now the time to bail or back real estate stocks on the JSE? Three fund managers respond to the question after real estate stocks staged a spectacular recovery this year from the unprecedented slump seen during the early days of the Covid-19 pandemic.
Investors in real estate stocks on the JSE are finally able to see light at the end of the tunnel after a torrid 2020.
Real estate stocks have staged a remarkable recovery in recent weeks after last year’s huge tumble of 35% that was seen in the SA Listed Property Index (Sapy), which comprises more than 20 of the biggest real estate companies on the JSE. It was the Sapy index’s worst performance on record.
Investors backing real estate stocks have been long-suffering as 2020 marked the third consecutive year in which such stocks delivered lower investment returns than general equities (the JSE All Share Index), 10-year government bonds and cash (the money market).
But in recent weeks, real estate stocks have rebounded, with the Sapy index delivering positive total returns of 20.1% so far in 2021 – outperforming bonds (delivered total returns of 0.7% over the same period), general equities (15.6%) and cash (1.2%).