Strong property returns unlikely to continue.

Zenith Investment Partners (Zenith) Investment Analyst Jonathan Baird has released the 2013 Listed Property Review and confirmed that although the sector performed strongly both domestically and abroad over the past 12 months, the strong returns are unlikely to be repeated in the coming year.

In addition, the Sector review noted that investment team turnover continues to plague fund managers. Baird described the personnel turnover situation as having a ‘domino effect’ with changes impacting many of the managers rated by Zenith.

Zenith expects that high level of turnover to continue with a number of managers seeking experienced personnel to fill key vacancies and while noting that there are some positives associated with staff turnover, there are negatives that will require careful management.

Despite these issues, the Listed Property Sector, both domestically and abroad, performed strongly during the twelve months to May 2013, with the S&P/ASX 300 (A-REIT) Index rising 30.62% and the FTSE Developed Rental Index returning 25.55%.

Referring to the Zenith Property Sector report Baird said, “Many managers have indicated that the Sector’s strong returns over the past 12 months has increased the number of securities trading above fair value, and therefore the magnitude of returns over the past 12 months are unlikely to be replicated in the coming year.”

Zenith’s Sector Report also noted that both “domestic and global Real Estate Investment Trusts (REITs) are now trading close to long-term average price to tangible book value”.

From an initial investment universe of 78 Property products: 6 were rated “Highly Recommended”; 18 “Recommended”; and 13 were assigned an “Approved” rating – see table below.

Standout performer was the S&P Global Infrastructure Index returning over 20%. Jonathan Baird concluded, “This year managers also highlighted the return of Real Estate

Investment Trusts to more traditional business models as being a key driver of the increased investor confidence in the sector.”

The post Zenith property review – strong returns unlikely to be repeated as key personnel turnover plagues sector appeared first on AdviserVoice.