Performance
On a total return basis, the S&P/ASX 300 A-REIT sector rose 20.8% over the last 12months (to the 19th of December 2024), which has seen it outperform the S&P/ASX 300 index by 7.9%. However, the A-REIT sector’s returns remain weak compared to the ASX 300, with 3-year underperformance of 4.1% on an annualised basis.
The strength of the A-REIT sector’s returns has primarily come from the following sources:
1. Exposure to a strong future growth thematic. Australian investors wishing to access the biggest growth story in global markets (the rise in AI and quantum computing) have limited direct access to these themes locally. Viewed as a correlated area of investment, A-REITs that hold logistics and/or data centers have instead been popular with investors.
2. The end of the interest rate cycle and expectations of interest rate cuts, both in Australia and in the US. The A-REIT sector has been more sensitive to expectations than the broader market – though a less dovish RBA and Federal Reserve than had been hoped for in December 2024 has stilted sector performance to a greater degree than the S&P/ASX 300.
