According to a new report released by Lonsec, the time is right for Australian property investors to start looking overseas for better investment opportunities.
The report covers the developments in the domestic listed property trust markets since the early 1990s, and examines how changes to the market have resulted in an increased level of risk.
Lonsec’s findings add to the chorus of warnings that have come from the Australian investment community over the past six months that the Australian listed property trust bubble is about to burst — or at least deflate significantly.
The current position of global property markets is also outlined by the report, and a comparison made of the history of these markets with the Australian experience. Highlighted in the report is the fact that a growing number of new markets are adopting Real Estate Investment Trust (REIT) status.
According to Lonsec, Australian property investors should consider investing in global real estate securities because of the domestic market’s maturity, as evidenced by its greater level of risk, its limited prospects for diversification, and its limited growth opportunities.
“When new markets adopt the REIT-type status, those markets are less mature, creating more miss-pricing opportunities, whereas markets that have had the REIT status for a while have experienced more efficient use of capital and debt,” said Lonsec senior investment analyst, property, Pete Morrissey.
“For people looking for growth combined with strong yields relative to other asset classes, being equities and bonds, global property or real estate securities look to be a strong option,” Morrissey said.
