SA REITs gain 2.4% in October, outpacing equities and bonds

South Africa's listed property sector extends its 2026 lead over equities and bonds as stronger balance sheets, rising distributions and renewed investor confidence support performance.

• SA REITs returned 2.4% in October, lifting year-to-date gains to 6.5%, ahead of bonds at 5.7% and equities at -3.6%.
• Eighteen of 22 listed property counters advanced, while rolling 12-month distribution growth reached 11.09%, comfortably exceeding inflation.
• Lower bond yields, stronger balance sheets and an oversubscribed R1.25 billion Fairvest capital raise reinforce confidence in listed property.

SA REITs extend their market lead

South Africa's listed property sector continued its recovery in October 2026, delivering a 2.4% total return and outperforming both the equity and bond markets as improving fundamentals strengthened investor confidence.

The FTSE/JSE All Share Index declined 0.4% during the month, while the All Bond Index gained 2.1%. For the year to date, South African real estate investment trusts (REITs) have returned 6.5%, ahead of bonds at 5.7% and equities at -3.6%.

According to the latest SA REIT Association Chart Book, compiled by Ian Anderson, Head of Listed Property and Portfolio Manager at Merchant West Investments, the sector has now outperformed equities in four of the past five months.

“SA REITs had another good month,” says Anderson. “The sector has now beaten equities in four of the last five months and is leading both equities and bonds this year.”

He attributes much of the resilience to stronger balance sheets, particularly as property companies continue absorbing the effects of September's interest rate increase.

Broad-based gains across listed property

October's performance was not driven by a handful of heavyweight counters. Eighteen of the 22 REIT counters tracked in the Chart Book recorded positive monthly returns, reflecting a broader improvement in sentiment.

Key October performers included:

• Accelerate: +17.5%
• Texton: +14.1%
• Stor-Age: +7.6%
• Delta: +5.9%
• Spear: +4.3%
• Redefine: +4.0%

Trading activity remained substantial, with approximately R11.9 billion in SA REIT units changing hands during October. Year-to-date performance has also been impressive. Oasis Crescent leads with a 36.4% return, followed by Octodec at 25.3% and Heriot at 23.7%.

Over the past 12 months, 21 of the 22 counters delivered positive returns, with Heriot gaining 61.9% and Octodec 53.3%.

The figures highlight how individual property companies can deliver materially different returns, even within a strengthening sector.

Bond yields retreat: Why valuations matter

The bond market provided an important tailwind during October.
South Africa's long bond yield declined from 8.92% to 8.72%, while the REIT sector's forward distribution yield increased slightly from 7.03% to 7.13%.

Consequently, the yield differential narrowed from negative 188 basis points to negative 159 basis points. Anderson cautions investors against relying exclusively on the sector's historical valuation averages. “The long-run average is no longer a fair benchmark,” he explains.

Historically, South African listed property companies were predominantly invested in domestic assets. Today, several major REITs hold significant offshore portfolios, making international bond yields increasingly relevant.

The Chart Book shows:

• Long-term average yield differential: -15 basis points.
• Ten-year average: -59 basis points.
• Five-year average: -181 basis points.
• October 2026 differential: -159 basis points.

Against the more recent five-year benchmark, Anderson believes listed property remains reasonably valued relative to bonds.

Medium-Term Budget supports property confidence

The October Medium-Term Budget Policy Statement (MTBPS) provided additional support for the bond market and, indirectly, REIT valuations.

National Treasury reported that government debt peaked at 78.4% of GDP in 2025/26, while tax revenue was running R17.1 billion ahead of February's estimate. Importantly, Treasury reduced weekly fixed-rate government bond issuance by R600 million to R1.95 billion and announced a bond buyback programme.

These measures supported bond prices and contributed to declining yields. Joanne Solomon, Chief Executive Officer of the SA REIT Association, welcomed the fiscal developments. “The Medium-Term Budget Policy Statement gave the bond market real support and that flows directly through to our members,” says Solomon.

She notes that lower bond yields underpin REIT valuations, while temporary fuel levy relief from November could ease pressure on consumers and benefit retail tenants.

For property investors, the connection is significant: improving sovereign debt conditions can lower financing costs and strengthen the relative appeal of income-producing real estate.

Strong balance sheets underpin REIT growth

October's interim company results reinforced the importance of disciplined financial management. Spear REIT reported distributable income per share growth of 8.02%, increased its dividend to 44.92 cents and raised full-year earnings guidance to between 9% and 11%.

The company also completed R1.4 billion in acquisitions at a blended yield of 8.99%, while maintaining a loan-to-value ratio of approximately 21.9%.

Equites Property Fund increased its interim dividend by 5.1% to 72.57 cents and reduced its loan-to-value ratio from 35.1% to 28.1% following progress with its UK disposal programme. Equites also reported South African like-for-like rental growth of 5.3%, with seven developments valued at R2.4 billion on completion under construction.

Meanwhile, Oasis Crescent remains ungeared, demonstrating that some listed property businesses are pursuing growth without conventional debt exposure.

These results illustrate how conservative gearing, selective acquisitions and debt hedging can support distribution growth despite a challenging interest-rate environment.

Investors back growth with fresh capital

Institutional investor appetite remains another encouraging signal.
Fairvest increased its accelerated bookbuild from an initial R500 million to R1.25 billion, with the transaction remaining oversubscribed.

The capital raise, priced at 675 cents per share, will support acquisitions and strengthen the company's funding position. Alongside capital raised by Spear, Fortress and Hyprop, the transaction indicates that investors remain prepared to provide equity to property companies with credible growth strategies.

Solomon says this continued access to funding reflects improving confidence in the sector's fundamentals. “Investors continue to support our members with fresh capital on tight terms,” she says.

Distribution growth beats inflation

One of the sector's strongest indicators is its improving income performance. Rolling 12-month distribution growth reached 11.09%, its strongest reading since 2017, excluding pandemic-related distortions in 2021 and 2022.

With inflation at 4.4%, distribution growth is running more than six percentage points ahead of consumer price increases.

This matters because REITs are primarily income-oriented investments. Sustained distribution growth above inflation can improve investors' real income, although distributions and capital values remain exposed to market and company-specific risks.

October 2026 SA REIT Chart Book: Key highlights

• SA REIT October return +2.4%
• Year-to-date return +6.5%
• Distribution growth 11.09%
• Counters gaining in October 18/22

Source: SA REIT Association Chart Book, October 2026. Figures supplied by the Association.

Outlook: Can listed property sustain its momentum?

The outlook for South African REITs remains supported by improving distributions, access to equity capital and generally stronger balance sheets. Anderson notes that companies reporting in October ranged from ungeared businesses to those with loan-to-value ratios of approximately 22% and 28%.

With many companies guiding towards mid-to-high single-digit distribution growth for the 2027 financial year, income fundamentals remain encouraging.

However, investors must distinguish between sector-wide performance and individual REIT risks, particularly exposure to debt, tenant concentration, refinancing requirements and property valuations.

The investment takeaway: South African listed property is demonstrating that disciplined capital management and inflation-beating income growth can attract investors even in an uncertain economic environment. Sustaining that performance will depend on earnings delivery, funding conditions and the strength of underlying property portfolios.

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Explore the full October 2026 performance rankings, REIT valuations, distribution growth, bond yield comparisons and listed property market analysis.

Source: SA REIT Association Chart Book, October 2026, compiled by Ian Anderson, Merchant West Investments. Commentary from Ian Anderson and Joanne Solomon, SA REIT Association.