MARKETS SPECTATOR: AREIT appeal

State Street Global Advisors says Australia's real estate investment trust sector is in better shape than it was pre-GFC.

The S&P/ASX200 Real Estate Index has slid 11 per cent since May 21 as investors have taken profits on yield stocks such as real estate investment trusts.

Amanda Skelly at fund manager State Street Global Advisors says the sector is in a healthier position than it was prior to the collapse of Lehman Brothers in September 2008 that sparked the global financial crises.

“I don’t think the sector is in a bubble,” Skelly told Markets Spectator. “We think yield opportunities are still there”.

Yields in the AREIT sector are still at 4-6 per cent, she says. Net asset to debt ratios are on average 26 per cent for AREITs compared with 36 per cent pre the global financial crises, Skelly says. She says AREITs are a good investment for those with an investment horizon of five to seven years.

At 1141 AEST the S&P/ASX200 Real Estate Index was down 0.7 per cent to 1017.20. The S&P/ASX200 Index had declined 40.606, or 0.8 per cent, to 4794.60.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles