Commercial property is continuing to provide higher returns for investors than Australian equities and bonds, research reveals.
Data from real estate funds manager, Folkstone Limited, found non-residential property has provided a total return of 10.4 per cent per annum over the last 15 years, outperforming Australian Real Estate Investment Trusts (A-REIT) (5.9 per cent per annum), Australian equities (9.1 per cent per annum)and bonds (7.7 per cent per annum).
Of the property classes, industrial property has been the standout performer over the last three years, providing a total return of 11.2 per cent per annum over the last three years.
Folkstone head of funds management, Adrian Harrington, said industrial property had provided a “relatively high yield” of 8.2 per cent in the year to 31 March 2015.
“The repositioning of the sector from manufacturing to high quality distribution centres leased to ‘blue-chip’ tenants driven by the growth in logistics is attracting significant investment into the industrial sector,” he said.
“The industrial sector is also benefiting from rising land values as the rezoning of inner city industrial land to residential gathers momentum.”
Retail centres, carparks, self-storage and medical centres also performed strongly for property investors over the 12 months to the end of March, proving a total return of 10.9 per cent.
