Unlisted property funds Australia's best performing asset class in 2017

In 2017, Australian unlisted property funds performed three times stronger than Australian equities, averaging total returns of 23.4% for the calendar year.

In its quarterly report, Zenith Investment Partners, MSCI and the Property Funds Association said that unlisted property funds delivered a total return of 23.4% for the year to 31 December 2017 compared to the 7.7% return from Australian equities. 

Maarten Broek, Executive Director at MSCI, said that unlisted property funds also outperformed most other asset classes on a risk-adjusted basis. 

“Property as an asset class is delivering strong returns driven by investor demand and supported by rental growth, particularly in the Sydney and Melbourne office markets.  

“Although yields have compressed over the last few years, Australian property returns still have a high income return component, relative to both other global property markets and other asset classes.

Mark Lumby, Head of Commercial Property at Australian Unity, said Australian Unity’s unlisted property funds continue to deliver investors stable income returns, consistent with the report’s findings.

“The performance of our funds is driven not only by market conditions but also, through the application of our experience and active asset management, which includes redeveloping existing assets to generate a higher income and capital growth profile for our investors."