Fifty years ago, General Property Trust (GPT) listed on the ASX. In so doing, it changed the lives of income investors for good.
Since then, Australia has become a global leader in listed commercial property. Local and offshore investors have been attracted to the relatively high income of AREITs and their competitive, risk-adjusted returns.
Then came Covid and an altogether different environment tailormade to tarnish the sector.
The mighty Westfield had put Australia on the map as a global retail real estate leader but also gave us one of the highest exposures to retail real estate in the world. Within a few days of lockdown, shopping centres were empty with the enforced switch to online seeing several years of growth compressed into a few weeks.
In offices across the country a similar shift was taking place. Having prevaricated for years over the pros and cons of working-from-home, managers and their staff were surprised at how smoothly and quickly the transition occurred.
These factors were the writing on the wall for the AREIT sector. Having reached a high over 64,000 in late February 2020, the ASX300 AREIT accumulation (total return) index fell 37% in March as investors tried to comprehend the implications of the unknown. Shopping centre stocks were amongst the hardest hit, notably the large mall landlords Scentre (down 55%) and Vicinity (down 52%) as investors panicked around whether their shopping centres would ever re-open.