A-REITs surpass unlisted property in March quarter

The strong turnaround in the March quarter saw Australian real estate investment trusts (AREITs) deliver one of the highest returns, surpassing unlisted retail property growth and government bond indices, according to data.

Data by Zenith Investment Partners, Australian Unity, MSCI, the Property Funds Association and the Property Council of Australia found despite the market volatility in the past 12 months A-REITs also managed to beat domestic equities (ASX200) by delivering higher average returns, leaving global equities as the only asset class which provided higher returns in this period.

Performance of the Australia’s listed property sector average, unlisted property sector average and S&P ASX 200 index over the 12 months to 31 March 2021

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The data confirmed that the unlisted property sector continued to see positive performance and remained strong through the period, helped by central banks driving the liquidity into markets.

Damian Diamantopoulos, Australian Unity’s portfolio manager REITS / head of research – property, said there was significant recovery in the last three months, especially for listed property, but also in the “consistently reliable” unlisted property sector.

But he stressed that for direct property investment, the rate of recovery remained slower, particularly in office and retail property assets.

“While recovery rates do vary, the overall solid performance of Australia’s property sector points to the importance of having a diversified investment approach, maximising exposure to high growth segments of the market when appropriate while delivering returns that are risk-adjusted and sustainable,” he noted.

On the other hand, the growth in the March quarter showed the rising market confidence helped by the vaccine rollout, gross  domestic product growth, national decreases in unemployment and strong retail consumption.

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