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Talking up their book

25 April 2006 Angelo Coppola

In essence listed property locally will offer better returns than cash or bonds, and earnings are still growing, with the market still suprising on the upside, says Mariette Warner property portfolio manager at Stanlib.

She goes on to say that growing earnings will cushion listed property relative to bonds, should bond yields increase, although one does need a longer term view, through the interest rate cycle.

Warner says that office rental growth was consistently strong in Cape Town, Durban and Pretoria, with Johannesburg relatively flat.

Cape Town was pushed by the foreshore development growth. It also appears that Pretoria is seen as a leading indicator for Johannesburg as commercial properties are bought and redeveloped for residential use, for the younger generation first time home buyers.

Industrial rental growth in the Durban area shows good growth trends.

On the other hand the listed property earnings growth and market cap growth has continued to surprise on the upside, ranging from 10% through to 35%. The super growth on the smaller stocks will also normalize over time.

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