Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

Australian unlisted property shielded from downturn

covid-19/AREITs/Zenith/Unlisted-property/dugald-higgins/Damian-Diamantopoulos/australian-unity/

12 October 2020
| By Jassmyn |
image
image image
expand image

Australian unlisted property funds were shielded from the economic slowdown brought by COVID-19 due to their slower appraisal-based valuation cycle, according to Zenith Investment Partners.

Unlisted property funds delivered 14.5% during the June quarter, up from 13.5% the previous financial year, data from Zenith, Australian Unity, MSCI, the Property Funds Association, and the Property Council of Australia found.

This strong performance was in contracts to Australian real estate investment trusts (AREITs) that were down 26.3%, while overall Australian shares fell 8.7%. Direct property was up 1.4%, while fixed income was up 5.5% and cash at 1%.

Zenith’s head of real assets and listed strategies, Dugald Higgins, said Australian unlisted property’s advantage was their slower valuation cycle.

“Moving forward, as more assets are progressively re-valued, returns in the sector are expected to soften as revisions to assumptions about vacancy rates, effective rents and capitalisation rates flow through,” Higgins said.

Australian Unity, head of research – property, Damian Diamantopoulos, said there was a growing disconnect between public and private markets and that many AREITs were trading at discounts to 30 June, 2020, asset-backing, and owned properties with above average asset quality.

He said industrial property had remained solid as the pandemic accelerated the e-commerce trend and drove demand for warehousing space, and there were pockets of strong performance in the retail sector.

Dimantopoulos noted the low interest rate environment along with substantial fiscal and monetary stimulus continued to support the commercial property sector.

“While COVID-19 has certainly disrupted the sector, there is a growing disconnect between public and private property markets at present. When coupled with a low interest rate environment there is a good chance this will result in an uptick in mergers and acquisitions at some point,” he said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

3 weeks ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

4 weeks ago

So we are now underwriting criminal scams?...

7 months ago

After last month’s surprise hold, the Reserve Bank of Australia has announced its latest interest rate decision....

3 weeks 2 days ago

WT Financial’s Keith Cullen is eager for its Hubco initiative to see advice firms under its licence trade at multiples which are catching up to those UK and US financial ...

3 weeks 6 days ago

While the profession continues to see consolidation at the top, Adviser Ratings has compared the business models of Insignia and Entireti and how they are shaping the pro...

1 week 1 day ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND