After a multiyear hiatus in dealmaking, the JSE’s property sector is back, hogging headlines with multimillion-rand mergers & acquisitions.
Year to date, nearly R10bn in fresh capital has been raised by various real estate counters via book builds and equity raises, the bulk of which is being used to cash in on acquisitive growth opportunities. That’s a marked change from the past five to seven years, when most real estate investment trusts (Reits) had to batten down the hatches, focusing primarily on cutting operating costs and paying down debt.
Analysts say the dealmaking landscape for property stocks has shifted significantly this year as interest rate cuts started to translate into higher earnings and improved investor sentiment, both of which have boosted share prices. The JSE’s all property index has rallied more than 20% this year, on top of last year’s 22%. That’s gone a long way to close the hefty 30%–50% discounts to NAV at which many Reits have been trading in recent years.
As Evan Robins, portfolio manager at Old Mutual Investment Group, notes, most Reits are no longer trading at “gaping” discounts to NAV. In fact, he says some are already trading at premiums. “That has allowed equity raises to be less dilutive. Similarly, borrowing costs are materially lower.”
Robins adds that allocations into property stocks from generalist equity investors have recovered notably this year, which makes it considerably easier for Reits to tap the market for capital. Given how muted investment activity has been since the pandemic, Robins isn’t surprised that property management teams are now focusing on dealmaking again. “There’s huge pent-up demand, from both buyers and sellers.”
Independent analyst Keillen Ndlovu says that for the past few years, most property companies had to sell assets and fix overstretched balance sheets. But the tide has turned. In fact, 2025 is the most active year on the asset-recycling front the Reit sector has seen in ages, he adds.
Major deals clinched so far this year include Vukile Property Fund adding two shopping centres to its growing Iberian footprint at a cost of more than R7bn (€368m), SA Corporate Real Estate’s R1.7bn acquisition of The Parks Lifestyle Apartments, a rental housing development spanning 2,000 units in Riversands on the outskirts of Fourways; and Dipula Properties’ R700m investment in three malls and two distribution centres, among them Protea Gardens Mall in Soweto (see table).
This is what renewed confidence looks like
— Ian Anderson
Western Cape-based Spear Reit concluded just over R1bn in deals, acquiring Berg River Business Park (Paarl), Consani Industrial Park (Elsies River) and Maynard Mall (Wynberg). Fairvest spent R674m to buy Jozini Mall and Tugela Ferry Mall in KwaZulu-Natal. Sector heavyweight Growthpoint Properties upped the ante with two unusual deals. It acquired stakes in the Boston Hydroelectric Plant in the Free State and in the new Cape Winelands Airport precinct. The cost of development of the airport’s first phase is estimated at R8bn and will include the terminal buildings and runway. Industrial, retail, office, logistics and hotel components will be added to the 450ha site over time. Growthpoint has the right of first refusal to co-invest in these properties. Meanwhile, Safari Investments unveiled plans to delist following takeover plans by Heriot Reit.
Lower debt funding costs have, of course, helped to increase the size and pace at which deals are being closed. But Ndlovu notes that Reits have also been able to execute quickly on acquisitive opportunities due to equity raises that have been enthusiastically supported by shareholders.
There have also been lots of bond auctions, which have mostly been oversubscribed, he says. As Ndlovu points out, increased buying and selling activity creates greater liquidity, which is good news for South Africa’s underlying commercial property market as it supports price visibility and more evidence-based valuations.
Ian Anderson, head of listed property and portfolio manager at Merchant West Investments, says October marked a turning point for the sector, as investors rotated back into South African Reits “at scale”. The sector notched a stellar 10.8% total return last month — vs the all share index’s 1.6% and bonds at 2.6% — as Reit shares worth nearly R14bn changed hands.
Anderson believes investors are rediscovering the diversification role of Reits in multi-asset portfolios. “This is what renewed confidence looks like,” he says, adding that October’s rally was supported by a slew of upbeat results.
Most Reits are reporting improving operating metrics, better than expected earnings and dividend growth, and stronger balance sheets; as a result, share prices have reached or approached record highs.
Anderson says the upshot is a further narrowing of discounts to NAV, which signals a reopening of the book build and equity window, placing accretive acquisition and development opportunities back on the table.
While the market has welcomed the property counters’ renewed vigour to bulk up portfolios, the risk is that some may end up overpaying for assets — or overgear again.
Ndlovu says prudent capital allocation will be key but adds that so far the sector has demonstrated discipline, with loan-to-value ratios now averaging a healthy 37%, down from 44% in 2021/2022.
Robins agrees, saying there’s little evidence to date that Reits have been behaving irresponsibly. “Indeed, they have shown restraint.” Still, he cautions that it is early days and there may well be a shift to a less conservative approach “if the bullishness continues”.
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