Australian REITs seen outperforming

SYDNEY: Australian property trusts are likely to deliver a total return of 12 to 15 per cent this year, outperforming local equities and other Asia-Pacific property markets, analysts said.

Australian REITs have proved resilient last year, slipping seven per cent against a decline of 14.5 per cent in the broader S&P/ASX 200 index.

In comparison, Singapore's FT ST Real Estate Investment Trusts Index dropped 16 per cent, while Hong Kong's property sub-index has declined 24 per cent.

Simon Garing, analyst at Bank of America Merrill Lynch, said Singapore property stocks faced a slowdown after the government rolled out measures to cool the residential market.

"We expect Asian REITs will continue to underperform for the first half of the calender year," he said.

"Australian REITs have been sort of a safe haven," he added.

Morgan Stanley is also expecting Australian REITs to perform better than the broad market as investors look for defensive plays and focus more on income rather than capital gains.

By Reuters