Daily ShareChat: Property Gross Index

By Jenny Ruth

Friday 22nd January 2010

Following a massive 17% gain in the September quarter, the NZX Property Gross Index gained only 1.8% in the December quarter compared with the 2.4% quarterly gain for the benchmark Top 50 Index, says Jeremy Simpson at Forsyth Barr.

Over calendar 2009, the property index gained 12.9% compared with the Top 50's 20.5% gain. Most listed property vehicles showed strong gains in the December quarter (Goodman Property Trust gained 9.2% and ING Property Trust climbed 5.2%) but dragging the property index down was AMP Office Trust which fell 8.5% in the quarter. The AMP trust also fell 13.2% through the year, making it the only property company to produce a negative annual return.

The sector started the year with significant uncertainty and fear, given the extent of the global property correction and tight credit markets," Simpson says. Share prices continued to fall until May, amounting to more than two years of share price declines, he says.

"Activity levels and investor confidence slowly picked up through the year."

After sizeable downgrades, valuations are now stablilising but will remain weak for a while as market rents continue to fall and vacancy pressures continue to build, particularly in the CBD and CBD office fringe markets, he says.

BROKER CALL: Forsyth Barr rate Kiwi Income Property Trust (buy), AMP Office Trust (accumulate) and Goodman Property Trust (accumulate).

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