Surge for unlisted property sector
The Australian retail unlisted property trust sector experienced its largest annual capital raising in 2005, with funds under management growing by 30 per cent.
According to a report by Property Investment Research (PIR), the sector now has total assets of $17.1 billion, and an average growth over the last 10 years of 38 per cent.
In addition, capital raisings are increasing in size, rising from around $35 million in 2002 to $62 million, indicating larger portfolios of generally higher quality properties.
John Nicoll, PIR head of client services, said the research also shows a move by investors into non-core property trust classes, such as residential housing and agribusiness property.
He added: “Perceived trend shifts are now clear, including the growth of open-ended trusts over that of traditional syndicates, and an increase in hybrid funds.”
The PIR report shows a 30 per cent growth for syndicates over the last five years, as opposed to 50 per cent for unlisted trusts.
“Investors generally prefer vehicles which have an expanding asset pool and potential liquidity options,” Nicoll said.
The research also found that the top 10 managers in the unlisted property sector operate a diversity of fund types, offering property securities funds and mortgage funds, in addition to the unlisted property option.
Fund evolution has continued at a rapid rate, and unlisted property funds now have “an increasing focus on total returns rather than income yields in a compressed environment”, Nicoll said.
He added: “Fund types are also changing with the evolution of hybrid funds, such as direct and indirect property ownership.”
Overall, Nicoll said the results indicate that “the average Australian investor’s appetite for property investment has not waned, as they continue to seek the benefits of professional management of quality assets in regulated investments”.
Recommended for you
Clime Investment Management has welcomed an independent director to its board, which follows a series of recent appointments at the company.
Ethical investment manager Australian Ethical has cited the ongoing challenging market environment for its modest decrease in assets over the latest quarter.
Commentators have said Australian fund managers are less knowledgeable compared with overseas peers when it comes to expanding their range with ETFs and underestimating the competition from passive strategies.
VanEck is to list two ETFs on the ASX next week, one investing in residential mortgage-backed securities and the other in Indian companies.
