Improving conditions for REITs
On the back of the reliable and above-average dividends offered, Australian real estate investment trusts (REITs) may be an attractive prospect for investors in 2013, according to Principal Global Investors.
In a report released last week, Principal Global Investors highlighted that while Australia had been expected to experience economic headwinds as a result of reduced export volumes to China, aggressive monetary policy by the Reserve Bank of Australia had produced a number of positive signs that residential property may be stabilising.
"One of the portfolio's largest active weightings today is an overweight to Australian companies," the report said. "We like the reliable and above-average dividend yield Australian REITs have to offer at 6.1 per cent, which is notably higher than the FTSE EPRA/NAREIT Developed Index's average."
According to Principal Global Investors, the fact that Australian REITs have recapitalised, as well as the continued capacity for interest rate cuts, could serve to further boost the property sector.
"We believe Australia will continue to prove an attractive market to overweight if broad global economic caution continues," the report said.
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