Improved lending conditions boost Aussie listed property
Lower interest rates and improved lending conditions helped the Australian listed property sector’s performance during 2019.
According to data from FE Analytics, within the Australian Core Strategies universe, Australian listed property sector returned 18.36%, over the year to 31 December, 2019, with a volatility of 13.5 and a Sharpe ratio of 1.23.
The best performing funds were UBS Property Securities (25.6%), AMP Capital Property Securities (23.53%), AMP Capital Listed Property Trusts (23.08%), Pendal Property Securities (22.92%), Pendal
Property Investment (22.85%).
In its final fact sheet of the year, UBS noted the housing markets in Sydney and Melbourne continued to recover with prices up 1.7% and 1.4% respectively in December, and were up 6% for the quarter.
“The recovery is being fuelled by lower interest rates and improvements in lending conditions,” it said.
“Retirement developer/owner Ingenia Communities was the strongest performer over the month as it was included into the ASX 200 index.”
It also mentioned the Australian real estate investment trusts (AREIT) sector benefitted from low gearing, secure distributions and strong demand for institutional grade real estate from sovereign and pension funds.
“A continuation of low interest rates and corporate activity (M&A) will support the sector, while any softening in bond yields could negatively impact pricing,” it said.
Pendal said residential REITs were assisted by a Coalition victory as negative gearing was left intact, as well as the Australian Prudential Regulation Authority (APRA) loosening lending conditions and falling mortgage rates.
“The sector was assisted by falling interest rates with the 10-year bond yield falling from 2.32% to 1.38% and the cash rate dropping from 1.5% to 0.75%,” it said.
Best performing Australia listed property funds v sector over the year to 31 December 2019
AUTHOR
Chris Dastoor
Recommended for you
VanEck is expanding its fixed income range with a new ETF this week to complement its existing subordinated debt strategy which has received $1 billion in inflows this year.
Specialist global equities manager Nanuk has celebrated 10 years of its flagship New World Fund and is actively considering its next possible vehicle.
Australian equities manager Datt Capital has built a retail-friendly version of its small-cap strategy for advisers, previously only available for wholesale investors.
The dominance of passive funds is having a knock-on effect on Australia’s M&A environment by creating a less responsive shareholder base, according to law firm Minter Ellison.
