Property performance unlikely to repeat, says Zenith
Zenith Investment Partners investment analyst Jonathan Baird has warned investors not to expect a repeat performance from property this year.
The listed property sector performed strongly over the 12 months to May 2013 both locally and globally. The S&P/ASX300 (A-REIT) Index rose 30.62 per cent and the FTSE Developed Rental Index returned 25.55 per cent, Zenith’s sector report found.
However, the strong returns experienced over the last 12 months were unlikely to play out over the next 12 months, according to Baird.
“Many managers have indicated that the sector’s strong returns over the past 12 months have increased the number of securities trading above fair value, and therefore the magnitude of returns over the past 12 months are unlikely to be replicated in the coming year,” he said.
Baird said investment team turnover continued to plague the sector, with a “domino effect of changes” impacting its rated managers.
Of 78 property products, Zenith rated six highly whilst 18 gained “recommended” status and 12 were granted an “approved” rating.
Baird said managers had moved back towards traditional business models - as seen in the return of REITs - which has driven confidence in the sector.
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