Improved lending conditions boost Aussie listed property
Lower interest rates and improved lending conditions helped the Australian listed property sector’s performance during 2019.
According to data from FE Analytics, within the Australian Core Strategies universe, Australian listed property sector returned 18.36%, over the year to 31 December, 2019, with a volatility of 13.5 and a Sharpe ratio of 1.23.
The best performing funds were UBS Property Securities (25.6%), AMP Capital Property Securities (23.53%), AMP Capital Listed Property Trusts (23.08%), Pendal Property Securities (22.92%), Pendal
Property Investment (22.85%).
In its final fact sheet of the year, UBS noted the housing markets in Sydney and Melbourne continued to recover with prices up 1.7% and 1.4% respectively in December, and were up 6% for the quarter.
“The recovery is being fuelled by lower interest rates and improvements in lending conditions,” it said.
“Retirement developer/owner Ingenia Communities was the strongest performer over the month as it was included into the ASX 200 index.”
It also mentioned the Australian real estate investment trusts (AREIT) sector benefitted from low gearing, secure distributions and strong demand for institutional grade real estate from sovereign and pension funds.
“A continuation of low interest rates and corporate activity (M&A) will support the sector, while any softening in bond yields could negatively impact pricing,” it said.
Pendal said residential REITs were assisted by a Coalition victory as negative gearing was left intact, as well as the Australian Prudential Regulation Authority (APRA) loosening lending conditions and falling mortgage rates.
“The sector was assisted by falling interest rates with the 10-year bond yield falling from 2.32% to 1.38% and the cash rate dropping from 1.5% to 0.75%,” it said.
Best performing Australia listed property funds v sector over the year to 31 December 2019
Recommended for you
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
