High returns forecast for active managers
Delivering comparatively high returns despite falling yields combined with above-average capital growth has placed actively-managed commercial property investments amongst those in the fastest growing asset class field.
This ability to generate higher total returns means active managers of commercial property are best placed to win investor support during the coming year, according to Century Funds Management managing director John McBain.
“A lot of the people who only came to commercial property … for its yields are starting to rediscover the basic principles that long-term property investors have always followed,” McBain said.
“That is that, across the full cycle, commercial property is very good for yield, but a key strength during times of lower yields is the ability to maximise capital growth through actively managing the assets.”
This can be done by repositioning the building or changing its original purpose by carefully choosing which industry to rent it out to based on trends in the suburb in which it is located.
McBain claims that unlike yield, which is largely a function of the asset and property market, asset growth can be greatly influenced by the investment manager.
“It’s that ability to undertake real bottom-up management of the assets that means active management approaches make more sense in commercial property than in any other asset classes,” McBain said.
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
