The Australia real estate investment trust (AREITs) index achieved its best performance in five months. The index returned 4.7% in April 2018 and outperformed the S&P/ ASX 200 Index by 1.5%.
On a 12-month basis, the AREIT index produced a 1.0% return after it rebounded from a flat performance in the 12 month period to the end of March.
The AREIT sector continues to provide a relatively attractive earnings yield of 6.6%. The average premium of the forecast earnings yield above the 10-year Australian government bond over the long-term is 2.77%. At the end of April, this premium was 3.86% after it fell by 0.10% from March’s comparable figure, so it is still relatively high.
The earnings yield of the retail sector, which is the largest constituent of AREITs, is 6.2%. The earnings yields of the smaller Office and Diversified sectors were 7.1% and 7.7% respectively.
Forecast earnings yields by property sector over the year are as follows:
1 Earnings per unit divided by unit price. Weighted by market capitalisation.