Latest NewsDirect Property Ownership in Aust Offers Strong ReturnsThursday, 13 October 2016

Reuters

Direct ownership of property in Australia has delivered higher returns than listed property trusts or fixed interest products, an industry association said.

Owning property directly has yielded total returns of 10.1 per cent over the past 10 years, compared to 2.1 per cent for real estate investment trusts (A-REITs), Australian Direct Property Investment Association (ADPIA) and consulting firm Atchison Consultants said in a report.

Fixed-interest products yielded 6.1 per cent over the same period and cash 5.7 per cent.

The report comes as some unlisted vehicles investing in direct properties struggle to refinance debts.

"Gearing over the longer term is rewarded, but requires considerable management skill and restraint. Problems with gearing have arisen as managers continued to borrow as property values rose," ADPIA President Linden Toll said in a statement.

The report showed that A-REITs returns outperformed directly owned property from June 1989 to June 2007, but after the market downturn from July 2007, returns from direct property were stronger.

Over the five years to June 2009, directly owned property achieved a 9.8 per cent total return against a negative 8.6 per cent for A-REITs, according to the report.

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