The unlisted property sector has delivered a standout performance over the last five years with annualised return of 21%, according to data released by Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia.
From the last 12 months as of September, 2019, the sector delivered 12.3% returns while, at the same time, Australian equity markets delivered an annual return of 13%. Following this, Australian real estate investment trusts (A-REITs) returned 15.7%, global equites stood at -1.9% and cash delivered 1.9% over the same period.
According to Dugald Higgins, head of property and listed strategies at Zenith Investment Partners, although capital growth remained broadly positive, momentum across sectors continued to slow with mixed results.
The additional headwinds were nimble international retailers, competition from online retailers, high rental costs, and slowing economic data.
“Office markets are benefitting from strong rental growth in key markets while growth in e-commerce continues to drive up demand for modern logistics facilities,” he said.
Additionally, the low cash environment continues to underpin momentum for capital seeking assets with attractive yields which is driving strong returns for investors in unlisted property funds, as according to Mark Lumby, head of commercial property at Australian Unity.
“As commercial properties generally have medium-to-long term leases which are indexed every year to CPI or have fixed increases in place, the sustainability of income from property becomes more attractive to investors,” he said.