While Australia offers a variety of sound investment opportunities, real estate is considered to be the most promising. Offshore investors are well-received, and although they are subject to Federal Investment Board review, that is relatively easy to obtain. The country has a land mass size equal to that of the United States, along with one-tenth of the population, which means that vast areas of undeveloped investment land are currently available.
Prospects to consider when investing
Investors should also note that several multiple-unit developments are now in the planning stage, along with commercial projects, rural projects and investment homes. Taken together, these outstanding opportunities for entrepreneurs that can only be found in Australia.
Real Estate Investment Trusts (REITS)
Analysts tell us that Australia’s property trusts are expected to produce a return of 12% to 15% in 2012and, in the process, outperform various Asia-Pacific investment properties markets, including local equities.
Simon Garing, a Bank of America Merrill Lynch Analyst, noted that Singapore property stocks experienced a slowdown when the government took steps to cool the residential real estate market. He further explained that Asian REITS are expected to under-perform for the first six months of 2012 and that, by way of contrast, Australian REITs are regarded by investors as a ‘safe haven.” At the same time, the country’s economy is resilient and it is anticipated that the Australian Central Bank will reduce rates in order to stimulate the economy.
In addition, Bank of America Merrill Lynch states that certain property stocks—such as Westfield, Mirvac Group, Dexus Property Group, Centro Retail Australia and Charter Hall—have attractive valuations. Morgan Stanley also feels that Australian REITs will outperform the wider market, while investors concentrate on income, as opposed to capital gains, and search for defensive plays as well.
Morgan Stanley also said that, at this time, the A-REIT sector offers a 6.6% dividend yield, while the Australian 10-year government bond offers 3.8%. The brokerage firm also expects equity markets to remain somewhat volatile and week, which should be favourable to the A-REIT sector in 2012. Lend Lease, Goodman Group and Dexus are among Morgan Stanley’s top picks.
