Property investors: look for long leases and fixed increases

As share markets across the globe become increasingly volatile – now may be the time to revisit listed property in your equity portfolios.

Great buying opportunities can be hard to find in a low interest rate environment, especially with residential property prices elevated and improving office vacancy rates crippled by tenant incentives at record highs of 35%.

Office incentives are at record highs to retain tenants – meaning there is limited underlying Earnings Per Share growth

2

Source: CBRE

It could pay to look at some alternative opportunities in listed property. We currently see an opportunity in Gateway (ASX:GTY), which provides manufactured housing for seniors.

This business model allows retirees to purchase a unit but not the land it sits on, leaving them eligible for both pension payments and rental assistance from the Australian Government.

Manufactured Home Estate prices are at a competitive price point

3

The site agreement is structured so that tenants pay rent; but there is minimal income downtime and a substantial notice period. CPI increases plus three-yearly market reviews has seen a 5.2% compounded annual growth rate (CAGR) from this property type over the past five years.

We expect that manufactured housing will rise in popularity, with many retirees’ superannuation balances unable to support owning a home and a comfortable retirement – and the population aged between 55-75 years is growing rapidly.

The proportion of 55-75 year olds is rising

4

For more opportunities in Listed Property, listen to Julia’s latest presentation for financial advisers: http://btim.com.au/blogs/article/adviser-briefing-webinar-some-alternative-opportunities-in-property/

or learn more about our highly-rated property capability here: http://btim.com.au/about/investment-capabilities/property/

 

Subscribe

Related Articles