Investors moving to non-core property
Australian investors are beginning to re-evaluate their positions in core property to try to get better value for money, according to a senior property fund manager at AMP Capital Investors.
“In the Australian market we’ve actually seen some of the advisers in the space start to get a little bit concerned about how expensive core property is and are now happy to go neutral to underweight in the sector,” AMP Capital Investors head of property funds management Andrew Bennett said.
As such, he feels investors will be putting more emphasis on non-core property in the new year, and to service this shift AMP is intending to focus more attention on this area.
“People are saying, ‘There are probably better global alternatives than just going into straight core property at some for the pricing we’re seeing at the moment’. So we think non-core property will continue to attract capital, and that’s one of the reasons why we’re looking at non-core sectors such as the retirement sector, where we see there are attractive opportunities to deliver sustainable investment returns,” Bennett said.
For the coming 12 months he believes investors will continue to look towards overseas markets to receive more attractive returns from the property allocation in their portfolios. In relation to this demand he thinks AMP has a competitive advantage, as it understands both the bottom up and top down approaches to these types of investment opportunities.
“That’s all about managing your risks and this is something that we as a business are very big on. Our portfolio construction and allocations to those sectors are done to not only enhance returns but lower the risk of your overall property exposure,” Bennett explained.
“This is something a lot of players in our market will have to start to get their mind around. There are a lot of property operators that are really good bottom up but don’t understand top down in this global universe. That is how to make a portfolio allocation to get sustainable long-term returns with lower levels of volatility,” he added.
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