Global property is not immune to investors' flight from risk because of anxiety about economic and political dangers.

Investors over the past four years appear to have thrown caution to the wind, and with it the risk premiums over long-dated government debt that they usually demand.

Yield compression is what they've also called the narrowing gap in returns between, say, super-prime London properties with their secure ownership and, say, Moscow with its questionable leasehold rights and risky business environment. Decompression of yields in both listed and directly held properties is likely to be quite swift if the current risk fears persist.

The SA listed funds fell 6,5% in May, but there was very little sign of directly held property yields moving from their record lows. The moment they do rise (and prices fall), the smart money is likely to see a buying opportunity.

SA property is unique. It has few international investors who might dump their stock. Its rents, building costs and prices are among the lowest in the world. Most important, sanctions and exchange control in the 1970s and 1980s dislocated SA property from the rest of the world, and it has only just started recovering.

Property is an income investment and the key to its property returns is rent. These have been rising in the past few years, first in industrial property, then in retail and now offices as a five-year glut disappears. Current prime office rents are just over R100/m² and are predicted to rise to about R200/m² over the next few years.

In Moscow rents are R461/m² and in Sydney R300/m². Rents in Hong Kong are R740/m² and in London they are more than R1 008/m². SA rents are recovering, while many overseas have peaked.

The FM was recently attacked by a reader in our letters column for continuously comparing SA costs and rents with those of other countries.

"Property is local," he said. True, but demand patterns are on their way to becoming global. For instance, SA now competes with India for European and US call centres. More to the point, inputs have already become global. SA's builders are short of skills and materials, partly because of our surge in economic growth, but also because SA engineers, quantity surveyors, plumbers and bricklayers are in demand in Dubai, Shanghai and other global development areas.

Wits University property professor Francois Viruly estimates costs are rising by about 30%/year. Property input costs will rise until skills are attracted. Global disaster may interrupt this - but smart money will buy up the bargains.