Investors should look at anti-themes
Investors should learn to recognise ‘anti-themes’ influencing markets, as opposed to only following trends driving investment opportunities, according to Quay Global Investors.
The fund’s portfolio manager, Chris Bedingfield, said that “knowing what to avoid was as critical as knowing what to choose”.
He mentioned aging population as one of the important themes of property investing, where investors were hoping to take advantage of the growing demand for aged care and medical facilities.
“But important anti-themes exist alongside this long-term positive theme,” he said. As far as Australian residential property was concerned, he mentioned the poor return outlook due to a surge in new supply in dwellings over the past 18 months.
However, according to Bedingfield, the retail property market was another example where investors could benefit from an active investment strategy.
“As the mid-market is getting squeezed by a declining middle-class, retail landlords will need greater focus on the luxury retailers,” he said.
“The old retailer model of hundreds of stores will end, and retailers are likely to have significantly fewer stores to supplement their online offering.”
Quay Global Investors also said that office property would tend to have high ongoing capital expenditure requirements due to high levels of tenant incentives and leasing commissions, and high build-to-land ratios, resulting in high economic depreciation rates.
“In all asset classes there are sectors with potential long-term headwinds that may detract from future performance,” Bedingfield said. “Knowing what to avoid is a critical as knowing what to choose.”
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