Total return for Australian commercial property has decreased by 300 basis points over 2019, however continue to outperform countries such as Canada, the United States and the United Kingdom.
According to The Property Council / MSCI Annual Property Index Q4 2019 results, Australian commercial property recorded a 7.5 per cent total return. Income return over the year was 5.3 per cent and capital growth was 2.1 per cent.
Total returns were lower across all the major property types with the retail, office and industrial sectors seeing total returns soften. Retail total returns declined to 2.0 per cent from 6.1 per cent in Q4 2018, office total returns declined to 11.5 per cent from 13.9 per cent, and industrial total returns declined to 11.3 per cent from 14.5 per cent.
Outside of the major sectors, hotels saw total returns decline to 0.8 per cent from 7.4 per cent but healthcare asset returns increased to 13.5 per cent from 9.6 per cent.
Across the major cities, Sydney achieved the highest total return in 2019 at 9.7 per cent followed by Canberra (9.2 per cent) and Melbourne (8.7 per cent). Brisbane (4.1 per cent), Perth (2.2 per cent) and Adelaide (1.6 per cent).
Despite the slowdown, Australia’s 8.3 per cent total return in 2019 meant it continued to outperform countries like Canada (6.7 per cent), the U.S. (5.9 per cent), Ireland (5.1 per cent) and the U.K. (1.2 per cent) all of which also saw total returns soften in 2019.