Pressure builds on property trusts

Listed property trusts are suffering as investors switch to less defensive shares, rising interest rates put pressure on valuations and the Aussie dollar strengthens further. The ASX 200 Property Index fell to 1416 yesterday, down from its June high of 1594. In October, the index's total return of 2 per cent underperformed the ASX 200's 3.5 per cent.

JP Morgan is expecting distribution-per-unit growth of 4.5 per cent for 2003-04 but said the sector will continue to struggle on a short-term basis. Property Research said while the sector is under pressure it does not expect underlying demand to decline significantly because the rally in general equities will not be as marked as it was in 2000. In addition, Australia's older population puts more emphasis on income rather than capital growth.

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