Buy offshore with caution
Some rand hedge real estate counters are trading at attractive discounts but investors shouldn’t expect values to recover any time soon, writes Joan Muller
It wasn’t that long ago that London real estate play Capital & Counties Properties (Capco), owner of trendy mixed-use precinct Covent Garden, was on just about every South African fund manager’s buying list. In 2015 Capco surged 57%, placing it among one of the JSE’s top-performing stocks for that year. Romanian-focused New Europe Property Investments (Nepi) and Tradehold, the UK and African property company in which retail tycoon Christo Wiese has a majority stake, had notched up equally impressive runs in 2015. But last year there was a sharp reversal in the fortunes of offshore property stocks on the back of a stronger rand and Brexit jitters. This happened both before and after the UK’s decision to exit the EU. The British pound lost 35.6% against the rand last year.
Unsurprisingly, counters exposed to the UK were hardest hit. By end 2016, Capco had tumbled more than 50% from its 2015 highs. Other UK-biased stocks, such as Capital & Regional, Intu Properties, Redefine Inte...
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