Real Estate/Property - Australia: AREITs Mar ‘26 review: Finding shelter in macro and policy uncertainty

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Real Estate/Property - Australia: AREITs Mar ‘26 review: Finding shelter in macro and policy uncertainty

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Real Estate/Property - Australia

AREITs Mar ‘26 review: Finding shelter in

macro and policy uncertainty

Industry Overview

AREITs Mar ’26 review: Finding shelter 21 May 2026

AREITs under coverage reported mixed operational updates for Mar ‘26., a reflecting an Equity

increasingly uncertain macro environment. Positives Retail operating metrics remain Australia

robust, while office incentives continue to show steady decline. FY26E earnings recovery Real Estate/Property

on track with management guidance reaffirmed across the board. Negatives: Outlook

Donald Chua >>

looking less sanguine, notably commentary around a potential slowdown in housing Research Analyst

development slowdown (SGP), Growth metrics continue to moderate in industrial, Merrill Lynch (Singapore) +65 6678 0415

reflecting a peaking cycle. A sell-down in AREITs is making valuations attractive with donald.chua@bofa.com

sector P/FFO near -1s.d below midcycle, levels seen in 2023-24 rate hike cycle. However, Adam Calvetti >>

catalysts remain limited at this point, particularly for the most rate sensitive names. Research Analyst Merrill Lynch (Australia)

Earnings visibility, and inflation hedge remain the key themes we like. GMG and SCG are +61 2 9226 5047

our top picks – less sensitive to rates and macro - with MGR a Buy on valuation. adam.calvetti@bofa.com

Resilient retail, improving office

See glossary list p14Retail stood out positively this season. Leasing spreads coming in at 4-6%, up from 3-

4% last quarter, with MAT sales growth keeping pace at 4-5%. Healthy sector OCR of

14-16% (vs. 15-18% pre-covid) should help landlords preserve pricing power in light of

rising inflation. FY26E.