Some listed property analysts and executives expect to see increasing consolidation in the sector in 2019 as funds trade at large discounts to net asset value and high-income yields. The SA Listed Property Index is offering a yield of about 9%, which makes it relatively cheap compared to previous years. Towards the end of 2017 the sector had a yield of about 6.4%. Property yields have an inverse relation to price. This suggests that when yields are high, prices are relatively cheap. But it is not clear where the consolidation will take place, with market commentators expecting SA’s large property funds to try to buy exposure to small specialised groups.

Arrowhead Properties CEO Mark Kaplan said consolidation had to happen in the listed property sector because investors would prefer to invest in larger liquid property companies that had scale and expertise to perform in a challenging local environment. Arrowhead, which listed in December 2011, had been one of the most acquisit...

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