South African listed real estate investment trusts surged in February 2026, delivering an 8.1% monthly return that outpaced both equities and bonds. This performance pushed the sector’s total market capitalisation beyond the R350 billion mark, marking a significant milestone for the industry. The gains build on strong momentum over the past two years, with the sector delivering 9.1% year-to-date returns as earnings growth, distribution recovery, and strategic capital deployment gain momentum.
Capital returns to listed property
Independent property analyst Keillen Ndlovu highlighted the shift in investor sentiment at the SA REIT Conference. Two years ago, 48% of fund managers were underweight the SA REIT sector. Today, only 12% remain underweight, with 40% holding overweight or neutral-to-overweight positions. This dramatic pivot reflects a renewed confidence in the sector’s ability to generate returns.
The physical economy is also showing signs of recovery. Ndlovu noted that cranes are visible across Sandton and Rosebank, suggesting the real-world construction activity aligns with the financial rebound of the REIT sector. This alignment between physical development and financial performance supports the argument that the sector has moved past a simple correction into a sustained growth phase.
Record capital raising and valuations
Corporate activity remained robust in February as several listed REITs reported improved earnings and strategic repositioning. Growthpoint disposed of its 55% share in Discovery Phase 1 for R2.32 billion. This transaction reduces the company’s exposure to Gauteng office assets and unlocks approximately R2.0 billion in net proceeds. Vukile Property Fund, through subsidiary Castellana Properties, announced the acquisition of the Islazul Shopping Centre in Madrid for €318 million to strengthen its expansion strategy in the Spanish retail market.
Fortress REIT reported a 16.7% increase in first-half distributable earnings. Redefine Properties indicated that its current trading position is the strongest since the post-pandemic market correction. The deep discounts to Net Asset Value (NAV) that characterised recent years have narrowed sharply to around 3% to 4%, reflecting a market that is pricing in higher confidence and lower risk.
Global recognition and new phase
Speaking at the SA REIT Conference, Peter Verwer, Executive Chairman of Futurefy, stated that South Africa has become a “world-beater” in global property performance. The sector has outperformed major markets including Australia, Japan, and the United Kingdom over the past five years. Verwer believes the sector is entering a new strategic phase, which he describes as “REITs 4.0.” This phase involves a digital-first, globally interconnected environment where REITs monetise data and tokenise real-world assets to support urban infrastructure development and economic growth without increasing public debt.
The rapid re-rating of the sector is evident in the performance of individual entities. Heriot led the pack with a 27.8% return, followed by Accelerate at 27.3%, Redefine at 18.5%, Fairvest B at 16.6%, and Hyprop at 13.6%. These results illustrate that the recovery is not uniform across all names, but rather concentrated in high-quality assets with strong cash flows and effective management.
The sector’s resurgence comes as macro conditions remain supportive. Lower inflation, gradually declining interest rates, a South African credit rating upgrade, and the exit from the FATF grey list all contribute to a positive environment for property assets. As the sector transitions from recovery to momentum, investors will watch whether improving earnings can justify current valuations. Distribution growth stands at 8.06% on a rolling 12-month basis, providing a solid foundation for continued performance. The performance comfortably outpaced other major asset classes, with the JSE All Share Index gaining 7.0% and bonds returning 1.7% for the month.
Top-performing REITs have generated total returns approaching 50% over the past 12 months, highlighting the sector’s rapid re-rating following the post-pandemic correction. “The physical economy is matching the real estate investment trust sector’s recovery.” The sector has also attracted significant new capital, raising R11.4 billion through oversubscribed book builds in 2025, while the deep discounts to Net Asset Value (NAV) that characterised recent years have narrowed sharply to around 3% – 4%. Outlook: From recovery to earnings momentum While the sector’s re-rating has been significant since mid-2024, the next phase of growth will increasingly depend on sustained earnings and distribution expansion.
