Global property exposure set to continue: Macquarie

The increased demand for global direct property is expected to strengthen further, according to an adviser study commissioned by Macquarie Direct Property, which found 93 per cent of surveyed advisers expect more clients to be interested in global property in 2007.

While global property is already a key consideration for most advisers, the survey’s findings indicate that many advisers expect it to become a more mainstream asset within retail portfolios.

The survey, which gathered responses from over 100 advisers, was conducted in February 2007 as part of a Macquarie Direct Property adviser road show in Sydney, Brisbane and Melbourne.

“Global direct property is without question becoming a mainstream fixture of the Australian investment landscape — and this is being driven by demand for diversification, as well as an outlook for strong total returns from global property markets,” said Richard Stacker, Macquarie Direct Property’s general manager.

According to the survey, 88.9 per cent of advisers currently discuss global property opportunities with clients, and 49 per cent believe global property should be considered by all investors, not just those classified as high-net-worth.

Educating clients about global property markets was flagged as an important focus for advisers, with client fears about investing in unfamiliar markets and lack of understanding of global markets highlighted as reasons why some are reluctant to invest in global property via real estate investment trusts and direct vehicles.

“We now need to work with planners to educate investors on global property investment … the predicted growth in global markets is an opportunity for investors — one that should not be missed due to lack of information,” Stacker said.

“As markets across Asia and Europe rapidly mature, opportunities are now opening up that provide access to markets previously unavailable to retail investors.”

In response to growing demand, Macquarie Direct Property recently expanded its international portfolio, the Macquarie Direct Property Fund (MDPF), to include direct investments in China, Hong Kong and Europe, giving Australian retail investors access to wholesale global property funds usually only accessible to institutional investors.

MDPF reported returns of 29 per cent for the 12 months to December 31, 2006, outperforming its benchmark, the office sub-index of the Mercer Unlisted Property Index, by 9 per cent.