October 19, 2012
AMP Capital said that prime CBD commercial real estate has delivered consistent rental yields since 1986, making the asset class a highly stable bet for investors.
Across the variety of real estate to be found in the varied Australian real estate investment landscape, prime CBD non-residential assets are still the best bet.
Data gathered by AMP Capital found that properties such as offices and shopping centres located in core CBD areas have a long and stable history of delivering consistent rental yields. Investors have gained rental yields of between 5% and 10% every year from 1986 onwards.
However, capital gains from these assets were not so consistent, and tended to fluctuate, said AMP Capital.
AMP's findings are based on the benchmark IPD Australian All Property Index, which tracks 1,629 direct property investments since 1986 with a combined worth of AUD 136 billion.
Damian Fitzpatrick, fund manager for property at AMP Capital said that with their ability to provide stable, reliable income, offices and shopping centres form a key component of a diversified investment portfolio.
"These investments can also provide a hedge against inflation due to regular rent reviews that are linked to the consumer price index (CPI)."
"However there are still underlying risks in the sector, therefore portfolio diversification and experience in managing these assets are critical," he said.
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