Property funds across the world have since recovered for the 2009 property bubble burst in the US to return close to 30 percent by the end of last year. But the party could be over too soon. Managers of global property funds don’t expect performance to be as spectacular in future, IOL reported.

They however say there is still an opportunity to earn good returns in less looked at markets in emerging and frontier markets such South Africa.

With the US dollar set to strengthen at least 12 percent every year in the medium-term, foreign investors are set to benefit if they put their money in South Africa’s real estate where a weakening local currency has made it cheaper to invest there.

The rapid depreciation of the South African rand against the US dollar has already contributed to local investors’ outstanding returns in 2014.

Fund managers point to the following main reasons why international investors should buy into the real estate opportunities in South Africa:

– The vast majority of listed companies in South Africa are what are known as diversified REITs, which consist of a combination of commercial, retail and industrial assets. The diversified nature of REITs in this country means that funds that invest in them cannot sell down or out of a specific sector if it is likely to underperform because of economic changes.

– South African real estate was the second-best-performing sub-category over the quarter and over the year to the end of December 2014, with average total returns of 10.6 percent and 25.7 percent respectively

–  South African Property companies have become leaner and more efficient since the financial crisis. The crisis led to a major shake-up in the market, with the larger and better-quality companies snapping up the assets of those that fell by the wayside.

– South African real estate investments are on the Johannesburg bourse are trading a discount due to the low economic performance of the country over the last two years. This is likely to give investors a good entry position before the prices rise as the economy recovers.

– Property has become a sought-after investment by sovereign wealth funds (state-owned investment funds), pension funds and wealthy families. So the earlier one joins the wagon the better. Unlike period leading up to the 2008/9 crisis, much of the growth in the property market is being financed by equity investors, not via debt, reducing the risk of defaults.