- The media has weighed into the 'property versus stocks' debate
- Jefferies analysis suggests ASX-listed property stocks could rise +18% in 2021
- This would beat the +15% predicted for Australian properties overall
When COVID first hit towards the first quarter of calendar year 2020, most people were shocked into the new realities of working from home, social distancing and mask-wearing, with pubs, restaurants and events shut down.
Some of the most affected industries included commercial real estate and offices as the majority of the workforce discovered the pleasure and pain of working from home. Would we ever need to go back to the office? Would the future be some blend of home office with the traditional? And what would this mean for commercial property businesses? Or the wider property market more generally?
Unsure about what the future held, buyers and investors fled. Sales fell. Property stocks and the broader property market took a hit.
Meanwhile, Australians embraced online buying like never before. With federal stimulus protection, Australians put some money away, but also spent. Not able to travel abroad and spend on overseas holidays, car yards, Bunnings and supermarkets were the beneficiary.
Notwithstanding the sudden 5-day lockdown in Perth – announced yesterday by Premier Mark McGowan – the situation in Australia has been better than in most countries. Various reports have put Australia to be the top 10 best countries in their response to Covid. New Zealand topped the list.
As the economy started to show signs of recovery in mid to late 2020, so the stock market rebounded. The ASX 200 dropped from 7,100 points in mid-February to 4,500 by mid-March (-36%), but has since recovered to 6,800 (January 2021).
Slow to recover, say the analysts, were the property stocks, or more specifically, the Australia real estate investment trusts (A-REITs). They were adjudged to have underperformed the ASX by 6%, and as The Motley Fool assessed, “… it would make more sense to own ASX property stocks than brick and mortar.”
Which brings us to the Jefferies analysis. As reported in several media, their outlook for these REITs is for +18% in 2021, which includes a dividend yield of 4.7%. Given that Australian property as a whole could be set for a reported +15% rise in 2021, would holding property stocks make more sense than property itself?
Meanwhile, property listings ASX companies REA Group (that runs realestate.com.au) and Domain (domain.com.au) have seen their share prices reach record highs recently, bouyed by the resurgence of the property market and continued low interest rates.