Social distancing hits AREIT returns
However, it fared better than its global counterpart index which lost 18.6%.
On a fund-specific basis, the median AREIT manager lost 14.3%, a slight improvement on the index.
Senior investment analyst at Zenith, Dan Cave, said the social distancing policies which saw people working from home had a profound impact on property returns.
However, he felt property still had a role to play in portfolios for its diversification benefits and yield advantages. Cave highlighted alternative assets that were away from offices or industrials such as self-storage and data centres which offered lower cyclicality and reduced portfolio volatility.
“REITS offer diversification benefits for multi-asset portfolios due to the asset classes’ underlying characteristics. There are also yield advantages owing to the rental income focus, and the opportunity for further sub-sector diversification across the emerging alternative sectors which provides lower levels of cyclicality compared to traditional property types,” he said.
"The outbreak of COVID-19 has quickly translated into a severe shock for the global economy and real estate markets, and the situation continues to be fast-moving. Zenith will continue to observe the sector closely, with a focus on how fund managers, landlords and tenants respond to current challenges and how this likely impacts or rewards investors."
AUTHOR
Laura Dew
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