REITs in Australia

[kiwiozearlyretirement]

Hello Australian investors.

Does anyone have any recommendations for a decent Real estate investment trust? Thinking I need to spread my real estate risk without the hassle of being a landlord.

[bigchrisb]

Australian  REITS have been an awesome investment over the last few years - I have had significant out performance from them.  However, I can't help but feel they are pricey at the  moment, and the things that have helped them (loss of trust after GFC and lowering interest rates) are now fully priced in. 

Be aware that REITS cover a lot of different asset types, from office buildings and shopping centres through to self storage units and data centres.  If you don't want to put the research  in but want general listed property exposure, consider a REIT ETF, such as SLF or VAP. 

I've been happy to buy REITS direct, as much of my day job is about providing services to the commercial property sector, hence I've been a stock picker.

REITS I own are:
AJD - owns data centres
DXS - offices and industrial
GOZ - office and industrial
GPT - Office and Retail
SCG - Australian and NZ retail
SGP - mixed + residential
SYD - airport
UOS - not technically a REIT but a malaysian property play
VCX - Australian shopping centres
WFD - international retail

Depending on how liquid you need to be there are also unlisted commercial property investments, but most need you to qualify as a wholesale investor (2.5m in investable assets or $250k/year income)

[kiwiozearlyretirement]

Thanks so much BigchrisB,

That is just the sort of advice I needed. I invest in ETFs elsewhere as I don't have the time or confidence to pick stocks etc.

thanks again

[k9]

Anyway, there are not that many REITs in Australia I guess. So just look at what an Australian REITs index fund contains, buy the top 5 or 10 lines, and you're done. Advantages of direct ownership without the hassle of stockpicking, and you'll be almost tracking the performance of the ETF.

I'm doing exactly the same here in EU. It's hard to do with a whole stocks index (because there are so many stocks) but quite easy to do with REITs, are there are not that many.

[bigchrisb]

Its a good point - the top 10 holdings in VAP account for 88% of the fund.  May as well just buy them yourself and keep the 0.25% expense ratio!

I had a quick look and couldn't find the current ASX300 sector weights for property - it gets lumped in with financials.  I did a quick scan against the holdings of STW for the pure REITS in the ASX200, and its about 9% excluding a number of property related stocks, so you get a bit of exposure to REITS from index funds like VAS.

[kiwiozearlyretirement]

I get what you are saying about keeping the 0.25% but if you buy individual REITs you are going to pay brokerage times 10 on each purchase rather than just once. I will have to run the figures.

It's a shame they don't seem to have residential property groups like they do in the US. They have REITs there which invest in huge apartment buildings which I think would smooth out some of the economic cycle volatility you get with commercial property. Surely there must be some who are involved in property developing for residential settings.

thanks again for the advice.

[kiwiozearlyretirement]

Actually thinking about it, the brokerage is probably a non issue as if I am investing 10000 a month I would just invest it over 10 months in 10 different REITs rather than 10 times in the same REIT. So I have answered my own question. But I guess this could be an issue if you had a larger sum to invest all at once.

[k9]

Don't know how it works with your broker, but mine takes a percentage of my investment (0.6% to be precise). So, whether I invest €10 000 in one time or in 10 times all over the year, or whether I buy 10 stocks at the same time for € 1 000 each or just one for € 10 000, I will have to pay the same amount in the end : € 60. So that's pretty irrelevent, but all brokers don't work the same way.