ASX real estate shares with a dominant focus on providing office space have weathered the past week well. Surprisingly well, some might say.
COVID-19 cases continue to rise across much of Australia, with New South Wales reporting 110 new infections today.
The new wave of the pandemic has now sent more than half of Australia’s population into lockdown. Including my own home state of South Australia. That hasn’t impacted my own work life much, as I’ve long worked from a home office.
But many thousands of others across Australia have been barred from returning to their office space until further notice. We’ll look at how that’s impacted the price of 4 office focused ASX real estate shares below.
COVID spreading at work
As msn.com reports, almost 10% of New South Wales COVID cases in the new outbreak (15 June through to 19 July) caught the virus at their work place.
According to NSW health authorities, 123 people have contracted COVID at work:
[A] spokesperson for NSW Health said it was “expected there will be additional direct workplace transmission events reported from within the cases in the outbreak to date.”
“Workplaces are a key setting where people are exposed to others outside their households, often for prolonged periods, and can transmit the virus.”
And this, from the Australian Financial Review:
NSW authorities are pleading with employers to allow workers to work from home… Employers were warned new $10,000 fines for forcing people into the office would come into effect from Wednesday.
NSW Premier Gladys Berejiklian said that, “The two biggest risks to getting or transmitting COVID are workplaces or the household. We cannot stress that enough.”
Now that’s not all office space we’re talking about here. Some of the infected workers are undoubtedly employed in other work settings deemed essential, such as grocery stores, servos and medical facilities.
But still, office focused ASX real estate shares have held up remarkably well in the face of new lockdowns.
How have these ASX real estate shares performed?
For the purposes of this article, we’ll look at 4 ASX real estate shares with a strong focus on the office market. Namely:
- Centuria Office REIT (ASX: COF) is an Australia based pure play office real estate investment trust (REIT).
- Dexus Property Group (ASX: DXS) makes much of its earnings from rental income received from its directly-owned Australian property portfolio. That portfolio is weighted towards the CBD office markets along the eastern seaboard.
- Australian Unity Office Fund (ASX: AOF) invests in Australian office property and related assets.
- Victory Offices Ltd (ASX: VOL) provides serviced office packages and co-working spaces.
And as a benchmark we’ll use the All Ordinaries Index (ASX: XAO).
Over the past month the All Ords is down 0.02% and the index has lost 0.64% over the past 5 trading days.
So how have our ASX real estate shares held up in comparison?
The Centuria Office REIT share price has gained 5.56% over the past month and it’s down 0.80% over the past 5 days. That handily beats the All Ords over the month and is closely aligned for the 5 days.
The Dexus share price is down 4.33% over the month, but it’s up 1.99% in the last 5 trading days. So below the benchmark over the month, but beating it in 5 days.
The Australian Unity Office share price trails the All Ords in both timeframes, down 7.14% over the past month and down 1.27% over the last 5 days.
Lastly, the Victory Offices share price, while down 5.56% over the last month, is up 6.25% in the past 5 days.
Though the results are mixed, clearly these office focused ASX real estate shares haven’t taken a beating from new stay at home orders sweeping Australia.
That could be because all 4 of the above ASX real estate shares are still trading well below their 21 February 2020 levels, the day the viral market meltdown commenced.
The Centuria share price remains down 24% since then, the Dexus share price is down 21%, the Australian Unity Office share price is down 22%, and the Victory Offices share price is down a painful 88%.
Perhaps after the panic selling in February and March 2020, investors are now looking beyond the renewed short and possible mid-term setbacks of rolling lockdowns to the eventual return of office work and the long-term potential value of these ASX real estate shares’ underlying assets.