Returns in the office property sector over the last 12 months have been higher than both the retail and industrial property sectors, according to a new report.
The latest quarterly report by Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia has revealed the office property sector provided 13.2 per cent returns in the 12 months to 31 March 2018.
Meanwhile, the retail property sector only delivered 9.4 per cent in the same period while industrial properties delivered a 11.2 per cent return.
Source: Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia
Commenting on the results, Australian Unity head of commercial property Mark Lumby said market momentum, reflected in overall returns, was mixed across various sectors.
“Office markets continue to benefit from strong rental growth in key markets, and industrial property is reaping the rewards of renewed interest from e-commerce and last mile logistics.
“At the same time, retail has weakened in the face of concerns around e-tailing,” Mr Lumby said.
MSCI executive director Maarten Broek noted that the strong property growth occurred while equity markets were being “dampened” by macroeconomic factors such as slow wage growth, house growth, rising bond yields and debt levels.
“Property markets have performed strongly on the short and long term, and our analysis shows that over the long term, the average return from direct property across all sectors has been 10.3 per cent over the last 32 years,” he said.
Thanks to favourable market conditions, the Australian property market was attractive to both domestic and foreign investors, Mr Broek added.
“Furthermore, our research shows that real estate not necessarily has to suffer from future interest rate rises, as real estate is a growth asset, unlike bonds,” he said.