Why REITs led the pack on the ASX today

CoreLogic has released figures showing national house prices rising. Accordingly, many ASX REITs also saw their share prices rise today.

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The Aussie real estate investment trusts (REITS), or real estate developers, were among the best-performing large caps and mid cap ASX shares today.

For example, out of the top 10 large caps, the share prices of Lendlease Group (ASX: LLC), Vicinity Centres (ASX: VCX), and Scentre Group (ASX: SCG) all increased by 2% or more. In the mid caps, Cromwell Property Group (ASX: CMW), and Abacus Property Group (ASX: ABP) sit on the leaders table. 

What drove the ASX REITs performance today?

One strong driver is the housing figures released today by CoreLogic.

CoreLogic’s most recent data shows that house prices nationally rose by 0.4%, with the exception of Victoria. Small markets like Darwin and Adelaide saw increases of 1.2%, with Canberra and Hobart recording rises of 1%. Perth and Brisbane recorded modest changes, up 0.6% and 0.5% respectively, while Sydney’s housing prices edged up 0.1%. 

CoreLogic pointed to low stock levels and strong demand as drivers behind the October rises. As quoted in the Australian Financial Review (AFR), CoreLogic head of research Tim Lawless went on to say; 

I think partly we can attribute that to the fact they generally have had better management of the virus itself, so we haven’t seen further lockdowns. But also they have better affordability and seem to be quite attractive to first-home buyers so there are some outside factors beyond the virus being better contained.

Other events 

DEXUS Property Group (ASX: DXS) today announced it has sold a North Sydney office tower above its book value. Moreover, it was recently reported that Amazon.com, Inc. (NASDAQ: AMZN) would be opening one of its fulfillment centres on a Dexus logistics park. It is estimated that Dexus has generated around $2 billion from planned exits and unsolicited offers recently. In a conversation with the AFR, Dexus chief investment officer Ross Du Vernet said:

We’re selling assets at book value and we’re buying back our stock at more than a 20 per cent discount to NTA [net tangible assets]. That is a very straightforward and value-enhancing trade for us.

The Dexus share price rose by 2.26% today.

Additionally, GPT Group (ASX: GPT) announced today it is planning to sell its 25% stake in 1 Farrer Place, the Sydney CBD landmark. At 30 June, its stake was valued at $584.6 million. The GPT Group has claimed two drivers behind the decision. First, the company prefers to hold or manage office towers it owns 50% or more of. Second, it intends to use the funds to grow its already increasing logistics pipeline.

The GPT share price finished the day up 2.98%.

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