A-REITs delivered a strong turnaround in the March quarter, surpassing unlisted property growth for the period and bolstering the strong overall performance of public markets, according to new data.
In the period ending 31 March 2021, the growth of A-REITs climbed sharply against Australian unlisted retail property and government bond indices, delivering overall 12-month returns of 41.9 per cent.
Over the last 12 months, A-REITs delivered higher average returns than domestic equities (ASX 200) and were surpassed only by global equities (54.6 per cent in 12 months).
Zenith Investment Partners head of real assets and listed strategies Dugald Higgins said the strong quarterly and 12-month performance of Australian property funds and global equity markets showed encouraging signs of Australia’s economic resilience.
“The growth seen in the March quarter indicates rising market confidence driven by factors including vaccine roll-out, GDP growth, national decreases in unemployment and strong retail consumption. Considering the market volatility experienced over the last 12 months as a result of COVID-19 uncertainty, it is an impressive turnaround to where we stand today,” he said.
Unlisted property has continued to generate positive performance over the last 12 months and income generation remains very robust overall. With central banks pumping liquidity into markets, strong demand is underpinning asset pricing in the majority of sectors.
Australian Unity portfolio manager REITS Damian Diamantopoulos said that the latest market performance highlights the importance of a diversified investment strategy.
“It’s clear we have seen a significant recovery in the last three months, for listed property especially, but also in the consistently reliable unlisted property sector. For direct property investment, the rate of recovery is slower, particularly in office and retail property assets,” he said.
“While recovery rates do vary, the overall solid performance of Australia’s property sector points to the importance of having a diversified investment approach, maximising exposure to high growth segments of the market when appropriate while delivering returns that are risk-adjusted and sustainable.”