Wealthy investors punt on commercial real estate
The inflow of cash will be boosted by the lower interest rates, which will turn investors away from holding cash to the inflation-proof bricks and mortar.
Healthcare, larger-scale shopping centres and traditional office and industrial assets are said to be the targets for the cash.
An expected increase in mergers and acquisitions within the listed real estate investment trust sector in coming months is likely to impact the institutional end of the market, with the retail "mums and dads" and self-managed super funds tipped to continue to favour the less volatile wholesale funds and small direct property deals.
The forecast flight to quality and safe-haven property comes as the Real Estate Investment Trusts sector beds down for the reporting season, covering the first six months of the 2013 financial year.
Analysts are tipping a steady return of about 4 per cent, with a focus on what changes new chief executives will make to their strategies.
Frequently Asked Questions about this Article…
According to directors of Australian Unity Investments, high-net-worth investors are returning to commercial property to chase higher-yielding, safe-haven sectors. Lower interest rates are making cash less attractive, so investors are looking to inflation-resistant 'bricks and mortar' assets for income and capital preservation.
The article says investor cash is targeting healthcare property, larger-scale shopping centres, and traditional office and industrial assets — sectors seen as higher-yielding and more defensive.
Lower interest rates tend to turn investors away from holding cash and toward property, the article explains. With cash returns reduced, investors look to commercial real estate as an inflation-proof alternative that can offer higher yields.
A 'flight to quality' refers to investors favouring safer, higher-quality property assets. The article notes this shift is expected as the Real Estate Investment Trusts (REITs) sector heads into reporting season, with capital flowing toward recognised safe-haven property types.
Analysts expect an increase in mergers and acquisitions within the listed REIT sector, which is likely to have more impact on institutional investors. Retail investors — 'mums and dads' and self-managed super funds (SMSFs) — are tipped to continue favouring less volatile wholesale funds and small direct property deals.
Analysts cited in the article are tipping a steady return of about 4% for the Real Estate Investment Trusts sector as it reports on the first six months of the 2013 financial year.
The article suggests retail investors may prefer lower-volatility options during REIT consolidation, such as wholesale property funds and small direct property investments, rather than participating directly in larger institutional deals.
The perspectives in the article come from directors of Australian Unity Investments and market analysts discussing the Real Estate Investment Trusts sector as it prepares for the reporting season covering the first six months of the 2013 financial year.
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