This article is from the Australian Property Journal archive
AUSTRALIAN core wholesale property funds was hit hard by the uncertain economic, rising inflation and higher interest rates in the March quarter, analysis from MSCI Real Assets shows.
Overall total return was marginally under 0.0% for the MSCI/Mercer Australia Core Wholesale Monthly Property Fund Index.
Notably, for the first time since March 2016, the industrial sector recorded negative capital growth on a quarterly basis, at -0.4%.
Office funds recorded a -1.2% capital growth, although this was a slight improvement from the -1.5% recorded in the December quarter. Retail funds, meanwhile, recorded capital growth of -0.8% for the quarter.
Benjamin Martin-Henry, head of Pacific real assets research at MSCI, said the market has entered a period of correction as for the first time since 2009 all sectors recorded declining capital growth for the quarter.
“Each sector has their own nuances that they are grappling with, but the overarching economic issues – namely cost of debt and inflation – are impacting everyone.”
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Despite the recent slowdown, overall annual performance is in positive territory. On a rolling 12-month basis, the index recorded a total return of 4.2%, compared to the 6.4% recorded in December quarter, but well below the 12.5% recorded 12 months ago.
The annual results for the index comprised an income return of 4.1% and capital growth of 0.1%.
Industrial funds continued to be the stand-out performers, although the total return of 8.7% is a far cry from the 25% recorded 12 months ago.
Retail funds performed better than their office counterparts, recording capital growth of 0.3% and an income return of 4.8%, for 5.1% total return. Office funds recorded a total return of 2.3%, comprising negative capital growth of -1.5% and an income return of 3.9%.
