While the prospect of rising interest rates has dampened demand for real estate trusts globally, the sector could see a resurgence in Australia, Morgan Stanley said.
Interest rates have headed higher since the U.S. Federal Reserve last year first broached its plan to taper its asset purchases. Rising rates hurt interest in real-estate investment trusts, or REITs, as their yields become less attractive and they face a more difficult financing environment for acquisitions.
(Read more: 2014 a 'litmus test' for Australia economy: Goldman)
"In a rising interest rate environment, you want to be very skeptical and nervous about bond proxies," like REITs, Richard Titherington, head of global emerging markets at JPMorgan Asset Management, told CNBC last week.
But in Australia, interest rates may not be headed north.
"So far, Australian bond yields have risen in line with global bond yields," Morgan Stanley said in a note. "However, if Australian bond yields stabilize or fall as the RBA (Reserve Bank of Australia) keeps rates lower for longer (as is our macro view), it would be positive for the A-REIT sector."