South African REITs lead to rise in foreign investment
By Peter Mindenhall

South African REITs lead to rise in foreign investment

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The establishment of real estate investment trusts (REITs) in South Africa has resulted in an influx in overseas investment.

Following the recent introduction of new legislation, property unit trusts and property loan stock companies will now be recognised as REITs for taxation purposes, which will mean they are exempt from paying capital gains tax (CGT).

Speaking to SouthAfrica.info, AJ Jansen van Nieuwenhuizen, head of tax at consultancy Grant Thornton, said the proposals relating to CGT are "certainly strong benefits of the proposed structure".

Meanwhile, Grindrod Asset Management chief investment officer Ian Anderson told Moneyweb a lack of formal legislation in the country's listed property sector had previously acted as a barrier to overseas investment.

He explained the announcement of a dedicated REITs regime has encouraged a large number of foreign financiers to plough money into South African real estate assets.

At the National Association of Real Estate Investment Trusts investor forum last month, executive director of Growthpoint Properties Estienne de Klerk revealed listed property in South Africa generated returns of 11.1 per cent in the first five months of 2012, the Property Loan Stock Association reported.
 
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