Several experts at the Portfolio Construction Conference have said that in the current property market, direct property as it currently exists is not delivering the long term returns investors expect.
Principal of Farrelly’s, Tim Farrelly, said that since the collapse of listed property and direct property, investing in them in the current market conditions would not generate returns.
“Today, the listed property trust [sector] has collapsed in price, and direct property has hardly moved at all,” Farrelly said.
Dominic McCormick, the chief investment officer at Select Asset Management believes listed property trusts could perform well in the current market conditions, but that unlisted property trusts are at risk of increased redemptions and funds closures.
McCormick said that investors who thought that unlisted property trusts would protect them from the current market conditions were mistaken, and that the suspension of redemptions and losses in Centro Direct Property Funds was a warning.
He added that now is one of those times when investors need to adjust to the changing dynamics of a difficult property market rather than implement a backward looking ‘set and forget’ approach.
