The Property Council/MSCI Australia Annual Property Index achieved a total return of 1.7% in the first quarter of 2021, down 5.7% on the previous year but steadily improving.
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Three key takeaways:
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According to MSCI executive director Mitchell McCallum, industrial was the only sector to see returns improve since the onset of the pandemic, recording a 290 basis point improvement since posting 12 per cent in March 2020.
Office sector returns slowed from 11 per cent to 4.8 per cent, while the retail sector ended the first quarter of 2021 at -6.3 per cent.
“While the retail sector’s quarterly income return has recovered to pre-COVID levels, capital growth remained negative for the tenth consecutive quarter. This was mainly driven by the weak performance of super and major regional malls,” McCallum says.
Sydney outperformed other city markets, posting a total return of three per cent. This was followed closely by Adelaide and Brisbane (both at 2.9%). Perth and Melbourne recorded annual total returns of one per cent and 0.7 per cent respectively. Canberra trailed at 0.2 per cent.
While the negative impact of the pandemic has been felt across global markets, McCallum points to some variance in recovery.
“New Zealand recorded a total return of 16.0 per cent for the year to March 2021 while Ireland and Canada were still in the red at -2.7 per cent and -1.4 per cent respectively.
“Australia, the United Kingdom and the United States count among those markets on the recovery path but with annual returns still hovering in the low single digits.”
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