Pre-retirees hint at unlisted property investment
The desire for yield in a low interest rate environment will see retail interest pick up in the unlisted property sector, according to Mark Pratt, general manager - property, mortgages and capital markets at Australian Unity Investments (AUI).
Speaking at a briefing in Sydney, Pratt said much of this interest is being driven by the self-managed superannuation fund (SMSF) market as retirees seek to reclaim some of the capital they've lost in the past few years.
He added that retail investor sentiment towards commercial property is reflected in the performance of equities and other growth assets over the past 12 months.
"From a capital perspective, we see that commercial property stands up - there's big demand, whether that's from institutional investors or the return of syndicate-type vehicles to the market," he said.
"Property values have generally increased in line with rental growth over the past 12 months, a situation we expect to continue in 2013, with cap rates forecast to largely remain stable over the same period."
With the managed fund sector challenged, Pratt said the "door is a little bit open" for financial planners to begin having conversations again with their clients in relation to alternatives to cash and term deposits.
"Commercial property has a lot more activity with a lot more people playing," he said.
"With a well-managed property there's no reason why they can't turn out yields of 7 to 8 per cent."
AUI head of healthcare and retirement property funds Chris Smith pointed to Australia's ageing population creating more opportunities for retail investors in the private health sector.
"With current trends and growth, there are estimates in the industry that around 50 per cent of all surgical procedures will be done in private hospitals by 2021," he said.
Smith added that there was often little volatility in income streams because leases generally extended over longer periods than other unlisted property assets.
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