Investors set to back real estate in 2015: Dexus
Investor demand for real estate is expected to remain strong in 2015, on the back of strong total returns from Australian Real Estate Investment Trusts (A-REITs) last year, according to property group, Dexus.
The group's Australian Real Estate Quarterly Review revealed A-REITS outperformed other asset classes with total returns of 27 per cent in 2014, as the equity market struggled due to volatility providing a 5.6 per cent return for the year.
"The sector significantly outperformed the broader equities market, as well as the unlisted and direct property sectors," the report said.
"A-REIT's were buoyed by a decline in bond rates of over 150 basis points and a flight to defensive stocks despite occupancy risk in the underlying assets."
The report revealed that 2014 was a record year for transactions in the real estate sector, with $28.1 billion worth of sales - $17.2 billion of which was in the office market, with strong residential demand encouraging the withdrawal of stock, which Dexus said could stabilise markets, particularly Sydney and Brisbane's CBDs, and North Sydney.
While Dexus forecast another strong year for A-REITs, "it remains to be seen whether volumes can repeat last year's record".
"Much will depend on the availability of stock including portfolio sales and the extent of demand from offshore investors," the report said.
AUTHOR
Nicholas O'Donoghue
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