Residential property trending amongst investment trusts

Freedom Property Fund, the fourth property company listing on the Johannesburg Stock Exchange (JSE) this year, last week announced it had launched two major residential property developments in an attempt to boost the group’s portfolio.

Residential property exposure on the JSE was mostly represented by two sister companies, Octodec Investments and Premium Properties — However, this is set to shift as interest in the residential sector is accelerating amongst South Africa’s listed Real Estate Investment Trusts (REITs).

Retail assets such as shopping centres have been proving popular, however property funds are finding opportunities within housing.

Visual International, who also recently debuted on the JSE, was set to invest R33million in residential property development projects over the upcoming two years. However, Arrowhead Properties spent over R1billion on residential stock as they went on an acquisition spree starting last year.

Following Freedom’s JSE listing, several projects identified in its prelisting statement have begun.

South Africa’s fastest growing town, Burgersfort in Limpopo is motivated by mining. Freedom commenced the development of the sizeable Tubatse Resident Estate, to include a variety of 3,700 residential units with a range of housing options and communal facilities. 

The CEO of Freedom Property Fund, Tyrone Govender explained of tremendous demand for accommodation within the region. The local economy is seeing significant growth as a result of the investment from the majority of mining corporations over recent years, as well as increased activity within the retail sector by the likes of Redefine and Resilient responding to this.

The mines estimate the need for housing in the area, currently at approximately 20,000 units and this demand goes across the entire economic spectrum.

In Tshwane, Freedom are also developing 90 residential units at Montana Residential, at a yield in excess of 12%. This is adjacent to the trendy Colonnade Shopping Centre and the Zambezi Country Estate.

The fund's diverse portfolio includes commercial, industrial and residential property assets of R1.56billion. These are complemented by a secure pipeline of approximately R3billion of commercial property developments and R7billion residential rental and sale property developments, across the country.