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AsiaPac REITs Outperformed Equities Except for Australian REITs

AsiaPac REITs Outperformed Equities Except for Australian REITs 

Global REITs gained 4.7% in July as interest rates stayed low

By Patrick Ma, Director, Listed Products and Research, Admiral Investments

August 5, 2021 – Asia Pacific’s top-100 most invested REITs outperformed equities in July, apart from Australian REITs, which fell 3.4%.

The GPR/APREA Investable REIT 100 index gained 0.7%, compared to the 4.9% contraction seen in equities in the region as the new Delta coronavirus variant spread throughout the region and clouded the prospects of an economic recovery.

The recent regulatory tightening by the Chinese government on sectors such as education, internet and property had also adversely affected equities’ performance. 

Australian REIT’s 3.4% decline was more extensive than Australian equities’ 1.3% drop, as renewed lockdown in various cities and states wreaked havoc on listed property owners and REITs. However, industrial REITs performed well. For instance, Goodman Group was up 6.9% in July, while National Storage REIT climbed 7.6%.

Regionally,  industrial and logistics REITs were outperformers as investors sought defensive REITs with steady income growth. In Japan, CRE Logistics REIT was up 10.8%, and Sosila Logistics REIT climbed 9.1%. Meanwhile, ESR REIT gained 8.5%, and ARA LOGOS Logistics Trust rose 7.9% in Singapore.

Overall, global capital market conditions remained favourable in July, as central banks worldwide – led by the US Fed – maintained loose monetary policies. Global equity markets rose by 1.8% during the month, mainly driven by the strong performance of the US stock market. However, global REITs, which gained 4.7%, outperformed equities. Generally, REITs continued to benefit from low-interest rates. 

As we look ahead, the global economy is starting to show signs of slowing down after an initial rebound from the coronavirus pandemic lows. The spread of the new Delta variant has dampened the outlook for a global economic recovery.

However, central banks such as the US Fed will likely stay with loose monetary policies. We believe that such a macroeconomic backdrop is positive for Asia Pacific’s REITs.