Portfolio’s 12.2 per cent returns beat benchmark – again

Property investment and management clients are celebrating another year of bumper gains on the back of properties bought and managed for them by Portfolio Management Services.

Properties managed by the investment company have once again outperformed the market, generating average annual returns of 12.2 per cent over the past 42 years. This compared with 10.8 per cent total returns from the REIA benchmark over the same period, according to independent analysis by Melbourne-based Atchison Consultants.

And the strong performance has continued over the past 12 years, with properties bought and managed by Portfolio returning 9.6 per cent on average each year – more than Australian shares (8.9 per cent), residential property (8.3 per cent) and bonds (6.4 per cent).

In a period when investment markets were battered by the Global Financial Crisis, the company’s portfolio of investment properties had no years of negative total returns – a result matched only by cash and bonds but for much lower returns.

The results illustrate Portfolio’s property buying and management expertise, which resulted in bigger returns for clients from both higher capital gains and stronger rental income.

The also support Portfolio’s successful strategy for buying investment property.

The investment properties Portfolio has acquired are close to major infrastructure, capable of providing above-average rental returns, were purchased at or below replacement cost and required a minimal amount of capital works.

The focus remains on established houses rather than off-the-plan options, says Portfolio’s managing director Jock Bing.

“A good investment needs to be in demand by both owner occupiers and tenants,” he said.

“Traditional small houses, townhouses and boutique or period-style apartments are always in demand. That is why our vacancy rates are at such low levels. Not only do tenants want to rent these properties but, when the time comes, both owner occupiers and future investors are also in the queue to purchase them.”

Portfolio properties in Melbourne’s north and south-eastern suburbs continued to perform strongly over the past year, while sharp gains in the Sydney market over the past 12 months were also reflected in Portfolio’s results.

Capital returns for houses bought and managed by Portfolio averaged 8 per cent a year, compared with 7 per cent for units. Capital returns for Melbourne investment properties of 8.3 per cent exceeded those for Sydney investment properties (7 per cent).

Atchison Consultants’ report is based on 880 investment properties held for more than two years. The full results areavailable here.

To discover how Portfolio Management Services can help you achieve your property investment goals, call (03) 9621 1044 today.