Property index rises 11.72% on news of Covid-19 vaccine, Biden win

CAPE TOWN – The South African Property Index has surged 11.72 percent in the past five days on good news such as developments on a new Covid-19 vaccine, but analysts caution the index remains well down in the year to date, and local real estate investment trusts face a tough year ahead.

In the year to date, the index was down 47.1 percent by Tuesday morning, and over 12 months, the decline remained at 48.6 percent.

Reitway Global chief investment officer Garreth Elston cautioned against reading too much in what might be “irrational exuberance” in global markets over the past few days, after sentiment was boosted by developments relating to a vaccine, and by the US presidential election success of Joe Biden, which had driven the appetite for investors to take on more riskier assets, which, in turn, had propelled global listed property prices upward.

On Monday, US drug-maker Pfizer said its experimental Covid-19 vaccine was more than 90 percent ready.

“We have seen these rallies on vaccine news before. A vaccine will only likely be available next year,” said Elston. “In South Africa, property groups also face dealing with the economic damage of the virus, while UK and the US economies could still benefit from financial stimulus measures, an option that is no longer available to South Africa.”