The ASX 200 AREIT Accumulation index rose by 11.06% over the
year ending 30 June 2014.
S&P ASX200 AREIT Accumulation
The outlook for key property sectors is as follows:
Data compiled in January 2014 confirm CBD office vacancy rate
increases in Sydney (9% of floor space), Brisbane (14.2%) and Perth
(9%). Melbourne recorded an improvement (8.7%).
An increased level of new space enquiries since January should
help to stabilise vacancy rates although rental growth is likely to
remain subdued given the excess supply that needs to be
Nevertheless we expect valuations to remain reasonable given
investor demand for yield and the developing trend of converting
non-performing office space to residential (especially in Sydney
Although the recent Federal Budget has dampened consumer
momentum, low interest rates and the influx of international brands
wanting shopping centre space, remain broadly supportive of the
In NSW industrial property supply has outweighed demand since
2010 and so rents have remained relatively unchanged.
Logistics and storage users continue to provide the bulk of
demand. New supply is running below long term averages, which is
helping to gradually rectify the supply imbalance. Average prime
yields of 7.75%+ have attracted investors, which has helped support
Despite gains in capital values, Melbourne vacancy rates are at
their highest since January 2010. Reports in recent months suggest
that enquiries for new space are gaining momentum.
Extremely low vacancy rates in the Brisbane market in 2012
prompted a strong supply response over the last 2 years, which has
overcompensated for demand. Rents and prices are unlikely to rise
while this new supply is absorbed.
AREITs exposed to residential property and construction have
benefited from the low interest rate environment which has
supported demand. These positive fundamentals are likely to
continue, at least in the short run.
Nevertheless, with interest rates at record lows and household
debt near record highs, this recovery is unsustainable over the
Investor demand for yield has helped support the AREIT sector,
driving up valuations despite relatively subdued fundamentals in
the office and industrial sectors. While retail and residential
remain attractive, these sectors are particularly sensitive to a
rise in interest rates and/or a change in consumer confidence. On
balance we believe better value lies elsewhere but expect AREITs to
remain well supported while interest rates remain low. We recommend
investors retain a modest underweight exposure.
An actuarial review of the Invensys Australia Superannuation Fund showed it to be in surplus to the tune of $189.2 million. In mid 2003, the Invensys Group proposed to the trustee that the surplus be repatriated to the principal employer in the group.
CIVs will have flow-through status for tax purposes and similar criteria as the MITs, to encourage foreign investment.
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