Aussie listed property falls short

Brian Parker

Global listed property offers far more diversity and investment opportunities for investors than the Australian listed property market, according to an investment strategist.

MLC investment strategist Brian Parker said the Australian listed property sector was so small that it should not be considered a separate asset class.

“The Australian listed property sector has changed dramatically in 10 years, there is now a much greater concentration in the sector,” he said.

“In 1999 the top five largest trusts accounted for 46.3 per cent of the market, which is concentrated enough, however by January 2008 they accounted for 73 per cent of the sector, which is quite scary.”

According to Parker, the average balanced fund investor is unconsciously overweight in Westfield, which does not make sense in what is supposed to be a diversified strategy.

“At the end of the day, 17 or 18 names, where Westfield accounts for 41 per cent of the sector, is not what we’d call a separate asset class.

“For example, if your manager were to have an index weighting in Westfield, you would end up with a situation where almost 4 per cent of your entire portfolio is in one stock. You therefore have more money invested in Westfield than you’d have invested in the entire emerging markets universe — it just doesn’t make any sense,” Parker said.

“To put it another way, you would have more money in Westfield than either the British equity market or the Japanese equity market.”

Due to this, Parker said MLC had moved its property exposure to be 100 per cent global.

“Now that an increasing proportion of the best quality real estate assets in Europe is in the listed sector, there's a great opportunity to capture that growth.”