Total returns for South African investment property returns fell to 12.9% last year, from 15.9% in 2013, according to figures in the South Africa Annual Property Index report.
The report released by MSCI Inc. (NYSE: MSCI), showed income return was steady at 8.7%, however, capital growth slowed to 4.0% from 6.8% the year before, reflecting a more cautious approach among valuers.
The IPD South Africa Annual Property Index measures ungeared total returns to directly held standing property investments from one open market valuation to the next and in the year to end 2014 returned 12.9%.
At a sector level, industrial property was the top performing sector during the year with a total return of 14.1%, outperforming retail sector at 13.3%.
The office sector continued to underperform, in a difficult market, but still managed a respectable 12.1% total return courtesy of a 9.5% income return. The vacancy rate of all three sectors improved during the year, but excess supply in specific segments continue to weigh on base rental growth.
At a property segment level, the top performer for 2014 was small regional centres at 16.2%, driven by improved occupancy and a stronger yield. Non-CBD offices and light manufacturing property counted among the worst performing segments for the year.
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