Australian real estate stocks battered in 2022 as rate hikes weigh

Stockland

30/12/2022 04:11

** A sub-index of Australian real estate stocks  .AXRE  is
down nearly 24% in 2022, compared with 18.8% rise in 2021; set
for biggest yearly decline since its introduction in 2017
    ** Real estate investment trusts (REITs) typically pay out
high dividends, but their dependency on borrowings to
develop/buy properties makes them vulnerable to rate hikes
    ** Major central banks ramped up interest rates at the
fastest pace and biggest scale in at least two decades in 2022;
Reserve Bank of Australia has lifted its cash rate by cumulative
300 basis points since May
    ** Yield on U.S. Treasuries and local Australian bonds have
risen sharply this year, making them more attractive compared to
riskier real estate stocks
    ** Australian home prices have also declined, falling for a
seventh consecutive month in November
    ** Goodman Group  GMG.AX , biggest Australian REIT by market
value, down 34.5% this year, set for its biggest decline since
2008
    ** Centuria Capital Group  CNI.AX  and HMC Capital  HMC.AX 
are the top losers on the AXRE in 2022, losing 51.1% and 46.9%,
respectively
    ** Dexus  DXS.AX , Mirvac Group  MGR.AX  and Stockland Corp
 SGP.AX  down between 13.7% and 29.8%
    ** Vicinity Centres  VCX.AX  is the only stock on the
sub-index with positive returns in 2022, rising 19.5%
    ** AXRE down 0.1% on Friday
 (Reporting by Harish Sridharan in Bengaluru)
 ((harish.sridharan@thomsonreuters.com))