Party’s over for LPTs

The popularity Listed Property Trusts (LPTs) enjoyed last year as a haven against troubled markets is set to diminish over the current year, says funds management groupAusbil Dexia.

After two strong years where LPTs outperformed the All Ordinaries Index, LPTs are now expected to struggle to reach the double digit returns they had become uncustomed to.

The reason, according to Ausbil Dexia, is that investors are already beginning to sniff out other growth opportunities as higher returns are forecast from an anticipated global economic recovery.

“Already, investors are becoming less defensive in their outlook and more growth oriented,” Ausbil Dexia property director Winston Sammut says.

Sammut expects property yields to drop to around 6 per cent overall for 2002, more than 8 per cent less than their 2001 watermark. But he still expects the commercial property sector to pick up during the year, although the wide availability of sub-lease space will produce a cap on rental growth.

Retail and industrial property should improve, Sammut says, partly fuelled by consumer sentiment and an economic recovery. However, Sammut singles out hotel trusts as the main beneficiary of any international recovery as more people travel.

He recommends investors wishing to generate sound returns without volatility should stick to an exposure to the listed property trust sector, with an emphasis on diversified trusts as well as higher yielding industrial and hotel trusts.