SA REITs slide 12.3% as global tensions hit markets

• SA REITs fell 12.3% in March as geopolitical tensions triggered a global risk-off environment across equities and bonds.
• Sector fundamentals remain resilient, with distribution growth strengthening and operational performance holding firm.
• Index expansion signals deeper market maturity despite short-term volatility and shifting investor sentiment.

Fundamentals hold despite market shock‍

South African real estate investment trusts (REITs) came under pressure in March, retreating sharply as global geopolitical tensions unsettled markets and triggered a broad-based sell-off.

The sector declined 12.3% for the month, reversing early-year gains and leaving it down 4.3% year-to-date. However, beneath the volatility, fundamentals remain intact, with improving income growth and stabilising operational metrics.

According to the latest SA REIT Chart Book, the sell-off reflects a valuation reset rather than a deterioration in underlying performance.

Market reset, not structural weakness‍

“The pullback in March was a valuation reset driven by geopolitical risk, not a deterioration in underlying fundamentals,” says Ian Anderson, Portfolio Manager at Merchant West Investments and compiler of the SA REIT Chart Book.

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“Rolling 12-month distribution growth improved to 9.43%, and total returns remain strong across much of the sector. This is a period of market de-risking rather than weakening company performance.”

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Geopolitical conflict shakes REIT sentiment‍

The geopolitical conflict that escalated in late February has been the dominant driver of market sentiment.

Its impact on REITs is indirect but powerful:

• Oil prices surged above $100 per barrel
• Inflation expectations rose sharply
• Interest rate cuts were delayed
• The rand weakened over 5%

This combination creates a challenging backdrop for listed property, where interest rate expectations and inflation are key valuation drivers.

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“South Africa is a net energy importer, and rising oil prices feed directly into inflation,” says Joanne Solomon, CEO of the SA REIT Association.

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“However, REITs offer growing income streams. With distribution growth approaching 10%, the sector provides a meaningful hedge against inflation.”

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Company results highlight operational strength‍

Despite the market pullback, company results point to resilient operating performance: 

• Growthpoint Properties: Dividend growth of 8.5%, vacancies improving
• Hyprop Investments: Distributable income up 12.9%
• Vukile Property Fund: Strong income growth, European expansion
• Spear REIT: Around 97% occupancy, strong collections
• Fairvest: Tracking toward upper earnings guidance

Improving vacancies, stronger rental growth, and active capital deployment continue to underpin the sector.

Index broadens as market deepens‍

A key structural development in March was the inclusion of:

• Dipula Income Fund
• Octodec Investments
• Spear REIT

They are all included in the FTSE/JSE All Property Index and SA REIT Index. This signals:

• Increased market depth
• Broader institutional relevance
• Greater investor access across market segments

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“Index inclusion improves visibility and supports demand from benchmark-aware investors,” adds Anderson.

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Outlook: Sentiment vs Fundamentals‍

Looking ahead, the key variable remains the trajectory of the geopolitical conflict.

If tensions ease:

• Oil prices could normalise
• Inflation pressures may soften
• Interest rate cuts could resume
• REIT valuations may recover

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“The next phase of returns will be driven by execution, not multiple expansion,” Anderson notes.

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Funds best positioned to outperform are:

• Strong retail and logistics exposure
• Disciplined balance sheets
• Effective capital allocation

Sentiment shift‍

March was a reminder of how quickly sentiment can shift. 

• Markets reacted sharply to geopolitical risk
• REITs corrected alongside global assets
• But fundamentals remain solid

The takeaway is clear: This is a market-driven correction, not a structural breakdown.  For investors, the opportunity lies in looking through the noise and focusing on income, quality, and long-term positioning. 
 
DOWNLOAD the March 2026 Chart Book
For a deeper dive into performance, sector trends and company data, access the full SA REIT Chart Book - March 2026.

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