The latest index data showed continued strong performance from industrial properties, moderating office returns , while retail delivered negative returns for the year.
The data in more detail as follows:
Office Property Performance
- Total returns for the year to 2Q20 recording 8.4%, down from 11.7% a year ago. This is now below all other historical periods.
- Bulk of the reduction is in capital returns – now at 2.8% for the year to 2Q20 (down from 6.1% this time last year).
- CBD markets have been hit harder than non-CBD; CBD office total returns reduced to 7.9% for the year to 2Q20 (down from 11.1% at 1Q20), compared with non-CBD markets falling to 8.9% as at 2Q20 (from 10.6% last quarter).
- Melbourne CBD recorded the greatest total return for the year (9.7%), followed by Sydney CBD (7.5%), Perth CBD (6.9%) and Brisbane CBD (6.9%), though all recorded significant declines over the quarter.
Industrial Property Performance
- Total returns recorded 11.6% for the year, slightly down from last quarter (11.9%).
- Distribution assets recorded a modest increase in total return during the quarter (to 12.7%), with other asset types relatively consistent. High tech business parks suffered a fall from 11.5% to 8.7% over the quarter.
Retail Property Performance
- Total returns over 2Q20, sliding to -9.4% for the year (from -1.9% last quarter). Capital returns fell from -6.6% last quarter to -13.1% this quarter.
- Sub sector performances have diverged further; super and major regional centres returned -12.9% for the year, regionals -10.8%, sub-regionals -5.8% and neighbourhood centres -2.8%.
- Victorian (-8.1%) and New South Wales (-8.8%) were the best performing states compared with South Australia (-12.7%), Western Australia (-11.8%) and Qld (-10%). The remainder of Aus aggregated recorded the worst result (-12.9%).