A-REIT sector growth: Marking 30 years of key trends and milestones
A-REIT sector growth: Marking 30 years of key trends and milestones
Over the past three decades, we have witnessed A-REITs evolve into a cornerstone of the public equity market, characterised by deep liquidity and robust growth. First introduced in 1971 with the listing of The General Property Trust, now known as the GPT Group, A-REITs have mirrored the success of their US counterparts and have become one of the largest REIT markets globally.
For 30 years, BDO has been at the forefront of A-REIT market analysis, providing expert insights and in-depth annual reports that have become essential resources for understanding the sector's evolution and trends.
To mark the 30th edition of BDO’s Annual A-REIT Survey, we’ve captured the key milestones that have shaped the sector’s development in this timeline.
The early years: 1990-1994
The early 1990s were marked by economic recovery from the recession of 1991, which saw commercial property values plummet by up to 40 per cent and office vacancies soar to 20 per cent. This period was transformative for A-REITs as they sought new capital sources, leading to a surge in investor interest. By 1994, BDO began publishing our annual A-REIT survey, leveraging our deep sector expertise to provide valuable insights.
Growth and diversification: 1995-2000
The mid to late 1990s saw significant growth in the A-REIT market, driven by institutional capital and lower cash rates. This era was characterised by increased public listings and asset diversity within investment platforms. Notably, Stockland pioneered internal management structures and stapled securities, a debate that continues today. BDO’s analysis during this period highlighted the sector's rapid expansion and the strategic mergers and acquisitions that fuelled growth.
The impact of leverage: 2000-2010
Leading up to the global financial crisis (GFC), leverage played a critical role in A-REIT performance. The early 2000s saw consolidation and securitisation of high-quality assets, with leverage ratios peaking at 45 per cent in 2007. The GFC brought significant challenges, with A-REIT market capitalisation declining by approximately 40 per cent. Despite these hurdles, BDO’s expertise helped navigate these turbulent times, providing crucial guidance on debt restructuring and capital raising.
Post-GFC recovery and COVID-19: 2010-2020
Post-GFC, A-REITs outperformed the broader Australian equity market, achieving an average return of 21 per cent by 2016. The 2010s were marked by low capital costs and a shift towards internal management. The COVID-19 pandemic in 2020 brought fundamental changes to the A-REIT landscape, impacting remote work, consumer behaviour, and supply chain management.
Rebound and resilience: 2024 and beyond
In FY24, the A-REIT sector continued to rebound from the pandemic's impacts, outperforming the S&P/ASX 200 Index by 12.1 per cent. Despite challenges such as rising cash rates, the sector showed resilience, with industrial and retail A-REITs leading the recovery. BDO’s comprehensive analysis revealed key themes and pockets of strength that will influence A-REIT performance in the coming year.
How BDO can help
BDO’s 30 years of expertise in the A-REIT sector underscores our commitment to providing innovative investment insights and strategic guidance. As we celebrate this milestone, we look forward to continuing our partnership with clients, helping them navigate the evolving real estate investment landscape.
Each year, we deeply value the insights and contributions from REITs across the country, as well as the engagement from our readership. If you’d like to discuss the 2024 survey results or how BDO can support with your own investment journey, contact us today.