Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

Property pushes its case: high yield, low volatility

property/australian-unity-investments/asset-classes/

12 September 2013
| By Staff |
image
image image
expand image

Planners and investors should consider re-entering the property investment market, which is currently offering good levels of yield and capital value and now represents a less volatile total return investment profile than other asset classes, according to Australian Unity Investments (AUI) head of portfolio management Ryan Banting.

He said the case for investing in property had strengthened off the back of a widening yield differential and the ongoing low interest rate environment.

According to AUI, property capital values in the Australian property market have stabilised and yield is back to long-term averages, with the spread between property and Australian Government 10-year bonds at 310-550 basis points for prime assets.

"In this environment, we believe property represents a less volatile total return investment profile than other risk asset classes," Banting said.

In particular AUI found that there was strong local and overseas demand for office and healthcare properties which were currently delivering the highest returns in the commercial property sector.

Banting said the current low interest rate environment made property investments attractive for local investors, while currency depreciation did the same for foreign investors with large overseas pension funds attracted by higher yields, lower vacancy rates and the falling Australian dollar.

According to Banting, office property returns were around a long-term average of 10 per cent, with 7.5 per cent made up of income and the remainder made up of capital growth.

Healthcare also continued to deliver high total returns (after fees) of between 8.6 per cent and 12.3 per cent over one, three and five-year periods to June 2013.

AUI head of healthcare and retirement property Chris Smith said this trend would continue as the Australian population aged. It was more dependent on healthcare services, with non-cyclical demand for core medical services protecting the sector from external market shocks.

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...

2 weeks 6 days ago

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

3 weeks 6 days 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 1 day 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 5 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...

6 days 22 hours ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND