Local shopping trend might boost neighbourhood ASX real estate shares

Have you been shopping closer to home more frequently since the pandemic? Well, CommBank’s Consumer Report says you’re not alone. We take a look at how that might benefit real estate shares.
The post Local shopping trend might boost neighbourhood ASX real estate shares appeared first on The Motley Fool Australia. –

Trends… Some investors play to them, others steer well clear of them. But there’s no avoiding that they influence markets in some shape or form. CommBank’s inaugural Consumer Insights Report has unveiled a trend that could give neighbourhood real estate shares a boost.

The report gives a wide-ranging analysis of the Australian consumer. No surprise, this edition reflects how we changed our lifestyle and behaviours because of the COVID-19 pandemic.

Times are a-changing

Some changes are unsurprising, such as an increase in online shopping across nearly all channels and categories. However, other shifts are a little unexpected – such as the high priority for Australian products, and a desire for spacious layouts. It seems even with all that time separated from people, we still like our space.

Another interesting arising trend is that consumers have developed an increased desire to shop locally. Rather than making the trip to the mega-mall, or city centre, Australians want to shop more at their local suburban shopping centre/neighbourhood store.

Based on CommBank’s research, 16% of respondents said they were likely to shop more at local suburban shopping centres in 2021 than pre-pandemic. Comparatively, only 10% said they were likely to shop more at large shopping centres.

Firstly, I’ll point out there’s a difference between what people ‘think’ they will do and what they actually do. However, if consumers follow the reported trend, we may see a longer-term uptick in foot traffic at local shopping centres. This might be beneficial to the Real Estate Investment Trusts (REIT) that have strong exposure to convenience-focused retail.

Real estate shares that might benefit

There are many ASX-listed REITS and property groups with exposure to suburban shopping centres, some more so than others. Here’s a couple that could stand to benefit from the shift in consumer behaviour.

The first cab off the rank is HomeCo Daily Needs REIT (ASX: HDN), HomeCo is an A-REIT that invests in convenience-based assets. The trust’s portfolio is spread across three sub-sectors – neighbourhood, large format retail, and health and services.

The neighbourhood portion that we’re interested in constitutes 50% of REITs targeted portfolio. Furthermore, the trust held $959.3 million worth of investment properties at 31 December 2020.

In the last year 12 months, HomeCo Daily Needs has returned 2.22% excluding dividends. It is worth noting that the trust is currently trading at a 1.87% premium to its reported net tangible asset (NTA) value.

The next ASX-listed investment that might be set to benefit is SCA Property Group (ASX: SCP). With 88% of its portfolio being neighbourhood investments, SCA might experience a tailwind from consumers.

At the end of the group’s first half, its NTA per unit was $2.25. Therefore, based on the property group’s current share price of $2.405, it is trading at a 6.9% premium to NTA.

Foolish takeaway

Investing solely based on an expected or perceived trend may not be the soundest decision. However, the data in the Consumer Report can add to making a more informed investment decision. Only time will tell whether shopping local is a long-term change or a short-term fad. 

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

More reading

BrainChip (ASX:BRN) share price tumbles on AGM update: What you need to know
Here’s why the WA Kaolin (ASX:WAK) share price is up 16% today
Why ALS, AMA, Chalice Mining, & Jumbo shares are pushing higher

The Commonwealth Bank (ASX:CBA) share price just reached $100
NAB (ASX:NAB) share price lifts amid reports of another pay scandal

The post Local shopping trend might boost neighbourhood ASX real estate shares appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!