The sharp fall in the listed property trust market in recent months has created enormous buying opportunity for prudent investors seeking to diversify their interests, according to property asset consultant Ken Atchison.
"A fall of 30% to 35% in the market means there's some definite value in this sector, especially when compared with the unlisted sector," Atchison said.
He cited four factors for his bullish assessment of the listed property trust market, including the relatively stable interest rate environment, rising national office rents (particularly in Brisbane and Sydney), higher yields and Treasury-forecast growth of 3% in 2008-09.
"Overall, I'm not buying into the gloom and doom scenarios. Although the economy has come off a bit, Treasury and the Reserve Bank are still looking at 3%-plus growth, and that's not to be sneezed at," he said.
"What we were seeing in the market was a lot more complexity with listed property trusts - more gearing, a funds management component, management fees, and even refurbishment, all of which were having a price-earnings multiple applied to them.
"With hindsight we can see that when the market was applying price-earnings multiples of more than 20 times, then a traditionally conservative investment vehicle was really being aggressively priced, and in the end that wasn't sustainable."
Atchison said the office market, in particular, has strong potential for growth.
"I see some real upside in the office market, and, to a lesser extent, in the retail market. In the industrial market, however, there's probably a little weakness," he said.
"At the same time, we're seeing strong demand for office space, especially in Sydney and Brisbane, and that's going to drive rentals and yields."