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ISCOVER
Staff Reporter
Low interest rates and property prices are expected to drive investors back into the market over the coming 12 months.
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According to Charter Hall, improved equity inflows from retail investors will be relocated towards higher income yielding investments such as direct property.
Charter Hall's head of retail investor Richard Stack said the falling cash rate, currently sitting at just 3 per cent, coupled with renewed investor confidence, has piqued many investors' interest in direct property which provides a starting yield to investors of approximately 8 per cent for core risk assets with moderate gearing.
"Direct property has a compelling investment case and the asset class is well placed given the historically large positive spread between property yields and debt costs, long leases and sensible debt and liquidity structures,” he said.
"Those looking to unlisted property for security and sustainable income need to make sure they have quality long term leased assets in their portfolio, rather than lower grade, shorter lease term investments which offer slightly higher yields however come with a higher risk profile.”
Research manager for Charter Hall, Chris Freeman, said Charter Hall sees the industrial sector as particularly attractive and increased its overall weighting throughout 2012 and has publicly disclosed a strong appetite for long leased industrial property acquisitions during 2013.
"With the strong yields and secure lease terms available on prime assets, the industrial sector is attractive in an environment where investors are seeking income returns and looking to minimise risk from a generally soft labour market,” he said.
