Investors likely to turn to property funds in 2016
Listed and unlisted property funds are likely to offer investors the best chance of securing returns on their capital in 2016, Australian Unity Investments chief executive, David Bryant, believes.
With Reserve Bank governor Glen Stephens down playing growth within the domestic market, and commodity prices in decline, Bryant warned Australian investors would be forced to focus on how to generate yield in the year ahead.
Bryant said that investors would have to look beyond traditional Australian Securities Exchange favourites — the banks — as they "will have some challenges in 2016", making property a more attractive option.
"Bad debts are likely to increase and this, along with the Australian Prudential Regulation Authority (APRA) monitoring the level of home loan lending, as well as business conditions not expected to improve markedly, means we are unlikely to see a lot of growth coming through in bank shares," he said.
"This potentially leads investors to property — both listed and unlisted. In this market, the best value is likely to be found in unlisted property, where revaluations haven't always kept pace with what is on market.
"This is unlike the case with listed property trusts, the majority of which are trading to a premium - in some cases quite a significant premium of up to 20 per cent.
"As well, listed property tends to rally along with equities and other interest bearing investments on market, so off market is likely where the opportunities will be in 2016."
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
