Investors seek refuge in listed property

Listed property trusts are continuing their popularity with Australian investors, who have turned to them in preference to the broader share market. The property trust sector's market capitalisation stood at $44 billion at the end of May 2002, up from $36.6 billion in May 2001, according to the S&P 300 Property Trust Index.

Over the past year, property trusts' strong performance sees them now in sixth place behind the gold, chemicals, food, paper packaging, energy and company trusts sectors. JB Were's chief equity strategist Mike Hawkins says that listed property trusts have been one of the star stock market performers, reflecting investor appetite for commercial property. The asset class has consistently outperformed the All Ords over the past 10 years, he says. Over the year to June 25, the Listed Property Accumulation Index grew 19.6 per cent, compared with a fall of 1.8 per cent in the All Ordinaries Accumulation Index. The sector's fundamentals are good, said Mr Hawkins, as it has matured and grown. The managers have improved and the property holdings are more diversified.

AMP chief economist Shane Oliver warns, however, while the medium term outlook remains strong, the next six months might be flat after the recent good run.
UBS Warburg's property analyst Kim Wright said the sector has outperformed the All Ords over periods of one, three, five and ten years. The yield, security and stability of earnings appeal to investors, she said, especially in an uncertain investment environment.