The Australian unlisted property funds were the best performing asset classes in 2017, delivering performance three times stronger than Australian equities, with average total returns of 23.4 per cent, according to a joint report prepared by Zenith Investment Partners, MSCI and the Property Funds Association.
The unlisted property funds also outperformed most other asset classes on a risk-adjusted basis, the study found.
MSCI’s executive director, Maarten Broek said: “Although yields have compressed over the last few years, Australian property returns still have a high income return component, relative to both other global property markets and other asset classes.”
“Property as an asset class is delivering strong returns driven by investor demand and supported by rental growth, particularly in the Sydney and Melbourne office markets.”
According to Australian Unity’s head of commercial property, Mark Lumby the property funds would also continue to deliver stable income returns as in 2018 investors would further face the dilemma of rising bond yields and heightened market volatility.
At the same time, the report confirmed that Australian equities delivered a total return of 7.7 per cent for the year to 31 December, 2017.