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Is $1,000 in Scentre shares a good investment?

rising asx retail shares and REIT prices represented by woman on escalator carrying shopping bags
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Scentre Group (ASX: SCG) shares surged 3.57% higher yesterday as the S&P/ASX 200 Index (ASX: XJO) climbed 2.16%. But can Scentre continue to outperform in 2020 and is it worth investing $1,000 into the ASX REIT right now?

Why is the Scentre share price climbing higher?

There were no announcements from the Aussie REIT in yesterday’s trade. That makes me think it’s due to investor optimism about an Aussie retail sector rebound in 2020.

Coronavirus restrictions are starting to ease around the country, which is good news for landlords. More foot traffic in shopping centres means more earnings for tenants and stable rental payments for Scentre.

Scentre shares surged higher and are now valued at $2.32 per share. It wasn’t just Scentre on the move yesterday, with the Stockland Corporation Ltd (ASX: SGP) share price also jumping a solid 4.23% higher.

But for all the positive sentiment, will Aussie REITs really bounce back in 2020?

Why ASX REITs could be in the buy zone

One argument is that the retail sector could strengthen in 2020. Aussies have been cooped up at home and could relish the chance to get back to brick-and-mortar retail stores.

However, the pandemic isn’t going away overnight. That means that even with the easing of restrictions, many people are doing it tough right now. Shopping centres rely on discretionary spending to prop up many tenants.

That means that a reduction in spending could be bad news for Scentre shares. Government stimulus measures have propped up the economy in the short-term but the medium to long-term impact remains unknown.

Foolish takeaway

I think Scentre will continue to be a strong ASX dividend share in the decades to come. However, the short-term outlook is a little more uncertain.

If you’re bullish on real estate or retail, Scentre or Stockland shares could be a great buy – both have been hammered in 2020 and could be absolute bargains, but I do think they’re a speculative buy.

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Returns as of 6th October 2020

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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