Office focused ASX real estate shares appear unfazed by new COVID wave

The work from home trend exploded during the early pandemic months, stripping offices of their staff.

| More on:
Excited office workers through paper in the air, inidcating a positive share price rise in ASX software and digital companies

Image source: Getty images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

But first…

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.

Foolish takeaway

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.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Real Estate Shares

Two retirees sitting on a bench together.
Earnings Results

Lifestyle Communities share price seesaws on FY22 results after ‘unusual’ year

Pent-up demand after lockdown and a 'life is short' mentality led to more sales at Lifestyle's independent living sites in…

Read more »

a man with hands in pockets and a serious look on his face stares out of an office window onto a landscape of highrise office buildings in an urban landscape
Earnings Results

Dexus share price wobbles amid strong FY22 results and reduced FY23 dividend guidance

Dexus recently agreed to acquire AMP Capital’s real estate and domestic infrastructure equity business.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Broker Notes

Goldman Sachs tips huge returns for the Goodman share price

Goldman Sachs says Goodman's shares could rise materially..

Read more »

A woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason today
Earnings Results

Goodman share price drops despite beating FY22 earnings guidance

Goodman beat its upgraded guidance in FY 2022...

Read more »

a man with hands in pockets and a serious look on his face stares out of an office window onto a landscape of highrise office buildings in an urban landscape
Real Estate Shares

GPT share price lifts despite 30% profit plunge

Here's how GPT Group is shaking off a poor headline figure to move higher today...

Read more »

Happy couple receiving key to apartment.
Real Estate Shares

Mirvac share price lifts on ‘strong result ahead of guidance’ for FY22

Mirvac shares closed today's session nearly 4% higher after the property developer released its results for FY22.

Read more »

5 mini houses on a pile of coins.
Earnings Results

REA share price marches higher on record final FY22 dividend

The global online real estate advertising company reported a 25% year on year boost in net profits.

Read more »

a man sits on his sofa loong at his phone and raises a fist to the air in happy celebration.
Share Market News

Why is the Qualitas share price rocketing 23% on Monday?

The real estate investment manager just received financial backing from a sovereign wealth fund.

Read more »