The Property Council/MSCI Australia Annual Property Index achieved a total return of 0.9% in Q3 2020, down from 7.9% a year earlier.
Whilst markets continue to soften, led by Retail, returns remain resilient with Office, Industrial and Healthcare continuing to report capital growth. Income has continued to soften to unprecedented levels, which may see capital values impacted more severely in the future. Conversely Healthcare has seen a return to growth in capital values, which supports the strong interest around the sector.
Some of the key results to come out of the index release include:
The annual total return for Australian commercial property in Q3 2020 was 0.9% with a 4.7% income return and -3.7% capital growth.
Investment performance for the Australian commercial real estate market has softened with the All Property total return 709 basis points lower than 12 months ago.
The annual income return of 4.7% represents the lowest figure since the index started 35 years ago. This has been due to difficulties in rent collection rather than income compression.
Q3 2020 represented the lowest annual growth rate since Q1 2010, when asset values were beginning to trend upwards post global financial crisis.
Across the major cities, Sydney fared the best in Q3 2020, posting an annual total return of 3.3% followed by Melbourne with (-0.3%), Brisbane (-0.3%), Canberra (-0.75%), Adelaide (-1.4%) and Perth (-1.9%) all experiencing negative total returns over the 12 months to September 2020.
For more information on the Q3 2020 results, click here.