Australian Fund Managers Mark Down Property Investments

Post by NeilMc on August 21, 2009 · Under Australian Economy, Business News, Property Market · Comment

Independent property research firm IPD has issued a report which suggests that capital values of Australian property have reached nearly two decade lows for the year ending June 2009 as investment fund managers mark down the value of their real estate assets.

The IPD and Australian Property Council index suggests that capital values across all real estate sectors plunged 13.3 per cent during the period, the largest drop in asset values since the 1991 recession.

“There is a clear move by the industry towards stronger governance and reporting, with many more organisations now valuing all of their assets each quarter,” Adrian Harrington, non-executive chairman of IPD Australia’s Board, said in a statement on Tuesday.

Of the 1,100 assets included in the IPD database, approximately 80 per cent were revalued in June, up from 60 per cent in the previous two years.

Real estate investment trusts (REIT’s) have taken the biggest hit, with Stockland Group, Australia’s second-largest property trust, reporting a loss of A$1.8 billion for the year to June.

The worst performing sector was office real estate, which returned a total of negative 9.6 per cent, whilst retail property posted negative 4.5 per cent in total return.
Despite the drop in capital values, IPD believes a bottom may either have been reached or reached shortly.

“The true test will be with the transactions of larger assets that are starting to occur what differences still remain between value and price,” John Garimort, director of IPD in Australia and New Zealand, said.

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