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Will property stocks outperform in 2015?

While oil and gas stocks such as Woodside Petroleum Limited (ASX: WPL) and Horizon Oil Ltd (ASX: HZN) have dropped like rocks in the past six months in response to lower oil prices – they’re down 21% and 64.5% respectively – there is a sector producing a surprisingly good showing.

Property Stocks Rally

Just last week Goodman Group (ASX: GMG), Charter Hall Group (ASX: CHC) and Westfield Corp Ltd (ASX: WFD) all hit fresh 52-week highs. It’s a sure sign that investors are heading for safe haven bricks-and-mortar assets.

Goodman Group’s shares hit a high of $5.86 and have gained 23% over the past 12 months giving the company a market capitalisation of nearly $10 billion. With industrial property portfolios spread across Australia, Asia Pacific and Europe, the group offers a diversified and reliable stream of income.

Charter Hall’s share price has rallied a massive 38% in the last year with the shares hitting a high last week of $4.89 and leaving the group’s market capitalisation just shy of $2 billion. With the group providing shareholders with exposure to office buildings, retail centres and industrial assets across Australia this is a well-diversified domestic property play.

Since its listing (in its current form) in June this year Westfield’s share price has climbed 24.5% and now boasts a market capitalisation of $17.8 billion. The group currently offers exposure to 40 centres across the USA, UK and Europe and according to the company’s website, last year approximately 425 million customers generated US$17 billion in retail sales through its centres.

A safe bet?

As you look towards 2015 and evaluate your portfolio, the question you need to ask yourself is – do you own a portfolio that you think will outperform the market? If the answer to that is “no” then it doesn’t make sense to run the risk of owning individually selected stocks, rather you could own a lower risk basket such as an index fund which tracks the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), which will ensure you receive the market’s return.

Given the market may struggle to head higher in 2015, it could be a case of owning defensive assets that protect your downside risk – property assets could be useful in this respect. Given the strong gains already experienced from the above three stocks however, investors may find they have run out of puff.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.


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