SA Reits Forecast 16-18% Total Returns

SBG Securities expects falling borrowing costs to lift distributable income per share across the sector in 2026.

Updated on Nov. 9, 2026 in Commercial

SBG Securities projects South African real estate investment trusts (Reits) could deliver total returns of 16-18% over the next 12 months. The forecast rests on expected declines in borrowing costs supporting sector-wide distributable income per share growth of 6-7% in 2026.

Why it matters

Distributable income per share fell 2.1% in 2024 despite net property income rising 4.5%, largely because of higher finance costs after years of volatile interest rates. Lower refinancing costs as fixed debt matures could reverse that pressure for Reit investors and property owners.

SBG Securities' projection is a forecast, not a realised outcome, and it assumes an exit yield of 8.41% on 10-year South African government bonds. Reits typically fix about 80% of their debt for an average of 2.3 years, leaving the remaining 20% exposed to the three-month Jibar plus a contracted margin.

The players

SBG Securities

SBG Securities is a South African stockbroking and investment firm whose analysts publish sector valuation and earnings forecasts for listed property trusts.

Joanne Solomon

Joanne Solomon is the chief executive of the SA Reit Association, the industry body representing South Africa's listed property trusts.

South African Reserve Bank (Sarb)

The South African Reserve Bank is the country's central bank, whose Monetary Policy Committee sets the repo rate that influences borrowing costs for Reits.

The details

The Sarb's Monetary Policy Committee raised the repo rate by 25 basis points to 7.25% on 23 September, following an inflation increase linked to an oil supply shock. SBG Securities expects fixed Reit debt facilities to be refinanced at rates 50 to 150 basis points lower per facility as they mature, and estimates a 4.8% valuation re-rating on top of forecast earnings growth.

2024: Net property income grew 4.5% while distributable income per share fell 2.1%.
23 September 2026: The Sarb raised the repo rate by 25 basis points to 7.25%.
2026: SBG expects sector distributable income per share to grow 6-7% as Reit debt refinances at lower rates.
31 December 2027: The repo rate is forecast to reach 6.25%.

Market Landscape

The 2024 decline in distributable income per share reflected the cost of several years of volatile interest rates on Reit debt. SBG's forecast of 6-7% growth in 2026 marks a turn, as debt fixed at higher rates is refinanced at lower levels.

Investors holding Reits may see total returns of 16-18% if SBG's forecast holds, though the outcome depends on interest rate movements. Reit distributions depend on refinancing costs, so falling rates on maturing debt could lift the income investors receive.

The takeaway

Reit returns hinge less on property income growth than on what the sector pays to borrow. Investors tracking the sector should watch the repo rate path and the refinancing of fixed-rate debt over the coming years.