The Property Council / IPD Australian Index - $76.4 bln and growing (AU)

Australian Direct Property continues to deliver solid returns with reported performance
recorded at 16.9% for March 2007. Composite property returns have dipped slightly from
the 18 year high levels recorded for the year to December 2006 as the market takes a breather.

In summary the total returns for the 12 months ending 30 March 2007 are as follows:

  • Australian composite: 16.9
  • Australian retail: 17.9
  • Australian office: 16.8
  • Australian industrial: 13.0

Commenting on the results Roman Matruglio, Senior Analyst at IPD, said, "Historically the
March quarter has one of the lower proportions of updated valuations included in the
sample. This is again the case this time around and is the main reason for the softening in
returns. We expect a stronger June 2007 number."

The most obvious trends from the analysis of the data and the data provided to the
institutions that support the services has been:
  • the continued strength of the office sector — no longer does it have a subduing effect on the Australian Composite Market
  • there have been no material compositional changes in the sub-sector representation of the index (Retail 54%, Office 39 % Industrial 6% Other 1%)
  • income returns have continued their slow decline, a result of the continuance of strong capital growth across the individual markets
  • industrial Capital Returns have maintained their strength while office and retail sectors have dropped back slightly from Dec 06 figures
  • the index has a sample size which now exceeds $76.4 billion in Capital Value

Commenting on the results, John Nguyen, National Research Manager for the Property Council, said, "Despite softening from historically high levels, Australian composite property still managed a return which was more than 5 percentage points higher than its 10-year annualized return of 11.8%. The weight of capital chasing assets, and the recent private equity interest in the property sector should see returns reach new record highs going forward."

The Property Council / IPD Index now tracks the performance of 707 assets worth in excess of $76.4 billion representing approximately 36% of the total market. It is the most comprehensive indicator of direct property performance in the country.

Source: IPD

Click here to read the full report.

Related News