Inflows into listed and unlisted property have picked up as confidence and volatility of total returns in the market shows signs of stablising.
“The money has come back in the listed side definitely, and that is because they have got their balance sheets in order, they have their got their gearing right down and are going back to the basics,” Property Funds Association (PFA) vice president and Centuria Property Funds chief executive Jason Huljich told InvestorDaily.
Huljich explained that on the unlisted side there has been a pickup in last few months mainly because of the yield equation.
“At lot of planning groups are seeing that is it a very good time to buy. There is very limited downside risk but fantastic opportunities. They can get a pretty strong yield as well as pretty good potential for capital gain,” he said.
But he noted that a balanced portfolio should have both direct and listed property in it, because they behave very differently.
According to the PFA’s latest property performance research report, annualised volatility of total returns in the listed property market has stabilised over the year ended 31 March at around 17 per cent, down dramatically from a peak in December 2009 at 34 per cent.
Signs of stability in returns following the global financial crisis (GFC) also resulted in improved investor confidence, the report found.
By comparison, volatility of total returns has remained significantly and constantly lower in direct property at 5 per cent.
“The lower volatility in the direct property market compared to listed property reinforces the outcome of valuation frequency. It also highlights the income characteristics rather than capital growth focus of direct property,” the report said.
