South African Real Estate Investment Trusts (REITs) recorded impressive returns of nearly 36% in 2024, significantly outperforming other asset classes. Analysts at Merchant West anticipate continued momentum in the sector, fueled by improving economic conditions and strategic portfolio management by major REIT players.
The strong performance is attributed to stabilized interest rates, enhanced property valuations, and a recovery in tenant demand across retail, industrial, and commercial segments. Notably, flagship REITs such as Growthpoint and Redefine reported robust rental collection rates, signaling resilience in the property market.
Merchant West expects the sector to benefit further from declining vacancy rates and increased foreign investment in South African real estate. However, challenges like load-shedding and geopolitical uncertainties remain potential headwinds.
Investors are advised to consider diversification within REITs, focusing on those with a strong presence in mixed-use developments and properties with sustainable energy solutions. With its attractive dividend yields and growth potential, the REIT sector remains a compelling option for income-focused investors in 2025.
