Property investors urged to diversify

Investors in the listed property sector can expect falling returns and are being advised to diversify for tougher times.

ABN-Amro Craigs said returns could drop 15 per cent because of the slowing economy. There was potential for vacancy rates to increase and tenants to downsize or go out of business, and this could result in less rent.

A research paper it issued late last month has examined returns from trusts after an update of portfolio valuations.

In the six months to September, Kiwi Income Property Trust's portfolio value sank from $2.09 billion to $2.05 billion, Goodman Property Trust's from $1.62 billion to $1.60 billion, National Property Trust's from $293.5 million to $280 million, and ING Property Trust's portfolio was down $14.2 million at half-year.

ING's properties were worth $1.1 billion in March, but management declined to say what the value was precisely at the end of September because, they said, acquisitions had also been made in that period.

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Posted: 20 Nov 2008

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