Opportunities opening in direct property

Property fund manager Real Estate Capital Partners (RECP) has put a positive spin on the turbulent ride direct property is enduring due to the global credit crunch.

According to its chief executive Andrew Saunders, recent price adjustments present one of the best opportunities seen in years for smart investors to secure good quality assets at a reasonable level of investment.

“A sharp decline in the ASX property index, combined with a 20 per cent volatility level for a sector that normally trades on 3-5 per cent volatility, indicates a significant adjustment in property values,” he said.

“However, this gloomy news is offset by strong corporate profits, investors retaining significant cash reserves to re-enter the market and continuing growth of superannuation.

“Combined with what we perceive to be lenders’ desire to work out asset issues, this leads us to a view that whilst asset values will adjust, quality assets will not adjust by the levels we have seen in the listed market, but selected buying opportunities will emerge due to the credit crunch.”

He advised investors to focus on the traditional fundamentals of property investing in order to be well positioned to take advantage of the upside when markets recover.

RECP divisional director of direct property Jason Bennett said office markets in Sydney, Melbourne and Adelaide may deliver this opportunity.

“As corporate earnings appear to be staying relatively stable, rents are therefore stable, which means investors can continue to seek yield from property investments,” he said.

“However, what is not known as yet is how far prices will shift, which will determine the overall return from the investment.”