Commercial Property Trusts outperform ASX-listed shares
Source: ABC News
Real Estate Investment Trusts (REITs) have outperformed the broader investment market by 50% over the past 5 years.
Property managers suggest these results are supported by well-balanced supply and demand in most markets and since 2011, REITs have been one of the better performing sectors on the Australian market, rising more than 50 per cent, compared to a 3 per cent gain for the ASX 200.
The commercial real estate market is reflecting the transition of the Australian economy from the mining boom, to services-driven growth.
Vacancy rates in Sydney and Melbourne have fallen to single digits but observers warn of corrections in Perth, where some REITs have significant exposure.
Despite these pockets of weakness, David Rees from property management firm Jones Lang LaSalle remains optimistic about the broader Australian market.
"I think in most sectors the market is reasonably well balanced," Dr Rees said.
"You look at the retail sector, you look at the pipeline that is coming through in construction. You make the same observation about the industrial sector."
Dr Rees said, while demand from financial services firms is softening in some areas, other industries are filling the void.
"In the last 12 to 18 months there has been a big increase in demand from technology - from IT companies. Small IT companies, quite big IT companies, who we always used to think were the fringe dwellers operating on the outskirts of the CBD," he added.