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REITs Rebounded In December, Australian REITs Up 6.9%

For 2021, global REITs rose 35.3%, outperforming global equities’ 22.3% increase

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

January 6, 2021 – After a weak November brought about by inflationary pressure concerns and the emergence of the new Omicron variant, both REIT and equity markets rebounded in December as market players adjusted to those concerns.

Global equities rose 4.3% during the month. However, despite a seeming return of risk appetite, global REITs still outperformed equities with a 7.7% increase. US REITs took the lead with a 9.0% gain as concerns about Omicron’s derailing the reopening of US economy eased. 

Asia Pacific REITs rose only 3.9% but still outperformed the region’s equities. Most Asia Pacific countries’ REIT markets outperformed their own equity market except for Hong Kong, which dropped 0.2% amid the region’s equity market rebound. 

Australian REITs led in Asia Pacific with a 6.9% gain, propelled by strong performance from industrial REITs such as Goodman and Centuria Industrial REIT. REITs with exposure to alternative assets like Arena REIT and Charter Hall Social Infrastructure REIT also performed well. Similarly, industrial REITs led performance among Japan’s REITs and Singapore’s REITs.

For the year 2021, global REITs rose 35.3%, outperforming global equities’ 22.3% increase. 

Meanwhile, Asia Pacific REITs gained only 9.4%, underperforming global REITs but still outperformed the region’s equities. Australia REIT market is the strongest among the region’s REIT markets, followed by Japan. 

Throughout 2021, we saw significant inflows from institutional investors into the commercial real estate markets of Australia and Japan, which bolstered the valuation of the real estate markets in those countries and, in turn, for REITs.

As we look forward to 2022, we believe the issues of inflationary pressure and economic growth outlook under the shadow of the Omicron variant will remain dominant. The market expects the US Fed to raise its benchmark interest rate for the first time in three years. It is also likely that central banks around the world are likely to follow the US Fed’s footstep to raise policy rates. 

Meanwhile, after the sharp rebound in economic growth from the pandemic lows in 2021, the global economy is facing challenges from growth deceleration. Omicron has come at a time when most developed countries had chosen the strategy of “living with COVID.” 

Policy choices imposed in response to the Omicron variant will affect global economic recovery and drive capital markets, including the real estate sector. Most developed countries  have achieved high vaccination rates, and therefore are likely to maintain or resume the reopening of their markets if the Omicron variant turns out to be not as severe as expected. 

In an environment of economic growth and rising inflationary pressure, we believe regional REITs will be beneficiaries.

REIT IndexPerformanceCorresponding equity indexPerformance

Dec 2021YTD-2021
Dec 2021YTD-2021
GPR 250 REIT Index 7.7%35.3%MSCI WORLD4.3%22.3%
GPR Aprea Investable REIT 100 Index3.9%9.4%MSCI AC ASIA PACIFIC1.9%-1.2%
GPR Aprea Investable REIT Australia6.9%15.5%MSCI Australia5.1%9.6%
GPR Aprea Investable REIT Japan2.0%7.7%MSCI Japan1.9%2.0%
GPR Aprea Investable REIT Singapore3.7%2.0%MSCI Singapore0.3%5.7%
GPR Aprea Composite REIT Index Hong Kong-0.2%11.8%MSCI Hong Kong0.5%-3.9%
GPR 250 REIT United States Index9.0%46.7%MSCI USA 4.0%27.0%
GPR 250 REIT United Kingdom Index6.1%29.4%MSCI UK7.3%18.5%
Based on market close at December 31, 2021

All performance numbers are based on total gross returns in USD

Sources: GPR and Bloomberg