Unlisted property funds shielded from COVID economic downturn

Unlisted property funds withstood the June quarter economic downturn to deliver a 14.5% return for the 12 months to 30 June 2020, up from 13.5% in the previous financial year, according to data released by Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia.

The strong performance was in stark contrast to most of the share market which was ambushed by the COVID-19 pandemic. A-REITS were particularly hard hit by the volatility posting a -26.3% return, while overall Australian shares fell -8.7%. Direct property narrowly held onto a positive performance delivering 1.4%, while fixed income delivered 5.5% and cash dipped to 1.0%. 

Dugald Higgins, Zenith’s Head of Property and Listed Strategies, said that while other asset classes have been affected by the economic slowdown, Australian unlisted property funds were shielded due to their slower appraisal-based valuation cycle.

“Moving forward, as more assets are progressively re-valued, returns in the sector are expected to soften as revisions to assumptions about vacancy rates, effective rents and capitalisation rates flow through”, he said.

For more information, view the quarterly fact sheet

About the Quarterly Property Investment Fact Sheet

The Property Investment Fact Sheet is an independent perspective of the risks and rewards of property compared to other asset classes such as equities. Zenith Investment Partners, MSCI, the Property Funds Association and the Property Council of Australia issue the Property Investment Fact Sheet each quarter.

All data is sourced from MSCI, an independent global provider of research-driven insights and tools for institutional investors. Commentary is provided by Zenith Investment Partners.

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