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Nicki Bourlioufas is a Morningstar contributor.

Over the past year, the listed property sector has outperformed the broader sharemarket and analysts expect a steady performance in the year ahead, with any worsening in the European debt crisis likely to trigger further outperformance as investor seeks income-yielding investments.

However, any upturn in the equity market due to improving global economic sentiment would likely see the sector underperform the sharemarket.

Australian real estate investment trusts (AREITs) allow investors to purchase an interest in a professionally managed portfolio of real estate assets. The real estate portfolio can include commercial, industrial, retail or a mix of assets. Investors benefit from regular rental income and any increase in value of the assets.

In recent times, investors have been buying up AREITs as "defensive" assets. As they collect regular and steady rents tied to longer-term leases, despite any downturn in the economy, this has drawn income-seeking investors.

"With the Reserve Bank of Australia (RBA) cutting interest rates, and with bond yields so low, this has made AREITs' dividend yields look more attractive. We've seen interest from investors for the dividend yields as other sources for income yields have fallen back or aren't looking as attractive," says Bianca Rose, property and equities portfolio manager with Ibbotson Associates.

"AREITs enjoy reliable earnings given their revenue is derived from long-term leases that tend to be more resilient in nature than equities, whose earnings can fall from over the short term with downturns in the economic cycle."

The performance of AREITs has been impressive over the past year. The S&P/ASX 300 Property Merged Accumulation Index has returned 10.98 per cent over 2011-12, compared to a drop of 7.01 per cent for the S&P/ASX 300 Merged Accumulation Index.

Rose expects AREITs to perform solidly in the year ahead, and investors can expect a steady and reliable dividend yield, which has averaged around 6 per cent over the past year.

"We're not looking for stellar returns, but we think it's attractive to what else is on offer," says Rose.

"Our outlook for earnings growth is quite modest. We're expecting earnings to grow in line with the consumer price index (CPI), but in an uncertain environment, that's not a bad result. Even if share prices don't move much from here, you are picking up solid dividend yields," she says.

However, Peter Sumner, portfolio manager of Australian equities with MLC, says any improvement in the sharemarket could stem the strong performance of AREITs.