Published on 14 September 2005 at 03:06 pm
Filed in » Property Portfolio Diversification
Australians lead the way when it comes to the diversification of their property portfolios through globalisation, and their example is catching on fast.
Billions of Australian dollars are ploughed into offshore property funds, trusts, developments and direct real estate holdings every year and in 2005 Australian interest has further intensified. Investors from around the world are now also slowly beginning to sign up to global property securities funds that the world’s banking giants have used Australia as their launch platform for.
Previous weekly overseas property investment fund inflow amounts are now being seen daily according to one property fund manager in Australia, and it is as a direct result of the strong appetite for overseas real estate assets in Australia that the world’s banking giants are targeting the Australian investor market initially for the brand new releases of their global property securities funds.
Firms like Invesco, Deutsche Bank and ABN Amro have all used Australia as the launch country for their latest round of global property securities funds and have enjoyed a strong take up. Strong individual and corporate investor interest for property around the world is spreading globally as many investors find that their domestic real estate markets have little left to offer them. This may bode well for the UK and Germany next year when they launch their first real estate investment trusts; they can expect to see investor interest from very far afield particularly in their commercial sectors.
In Australia the majority of money is flowing into LPTs (Listed Property Trusts) and also unlisted property securities funds and these underlying funds are aggressively targeting overseas commercial, industrial and residential stock in the US, Japan and Europe and producing some pretty impressive returns in the process. Just one example of a particularly successful fund is the Colonial First State Colliers International Property Securities Fund which generated a return of 56% in the year preceding July 2005.
In terms of the percentage amount of investment being moved offshore via property it is interesting to note that where previously 40% of all money in Australian LPTs was invested into overseas property, this year the percentage has already increased to around 66%. One asset management firm advised us that AUD 2 billion out of AUD 3 billion invested with them has effectively gone into offshore property purchase. Analysis of this increasing trend has highlighted that in the next 3 years the overall amount placed into offshore property investment via LPTs alone could be in the region of a staggering AUD 80 billion.
Whether you favour a listed property trust (LPT), real estate investment trust (REIT) or securities fund, chances are if you’re living in Australia the underlying assets you’re buying into are overseas properties and this trend is also going global. Therefore maybe we should all realise that true success lies in diversification and true diversification comes from embracing globalisation!
