Stock picking is becoming increasingly difficult in the property sector on the back of growing volatility in share prices. The SA listed property index (Sapy), which makes up the JSE’s 20 largest real estate stocks, has been on somewhat of a roller coaster since April. Property stocks are still up 8% in the year to date, but the index has shed 7% since the end of July. Over a 12-month period, the sector is down 3%. Nesi Chetty, head of property at MMI Investments & Savings, says softer property prices are in line with higher bond yields, which have been negatively affected in recent weeks by political uncertainty, the decision by some local fixed-income asset managers to stop lending to state-owned enterprises, and the possibility that US interest rates may rise. Another reason for the big swings in the property index appears to be the sector’s growing exposure to offshore earnings. Offshore counters are, of course, more sensitive to rand exchange rate movements and global geopoliti...
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