In property, we trust – maybe
Property will perform favourably against other asset classes again in 1999 and annual returns of about 10 per cent are forecast for the next three years, according to a leading researcher.
But the Federal Government's tax reform package threatens to cut returns from listed property trusts (LPTs) by 10-15 per cent, another expert warns.
Retail will be the top returner in 1999 followed by the office sector, AMP Asset Management property research manager Louise Joslin told a property forum in Melbourne last week. But other property sectors can expect a roller-coaster ride over the next or year or two.
Listed property trusts (LPTs) produced returns of about 18 per cent, mainly driven by large-cap trusts, APN Funds Management director Howard Brenchley told the forum. But these will be restricted in 1999 by the lack of good investments available.
"The growth for LPTs in 1999 will come from the mid-cap LPTs, with some offering yields of between eight and nine per cent," he says.
Issues for LPTs in 1999 will be tax reform, especially the GST, entity tax and the definition of 'trust'. "These changes could affect LPT performance by between 10-15 per cent if they are all implemented," Brenchley says.
The will also be further rationalisation of LPTs in 1999, he adds. This will occur mainly by manager changes rather than direct take-over bids.
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