Investors revamp intl property strategy
Friday, 19 February 2010 12:20pm
The tide is changing for international property assets as Australian instos look to make core investments overseas - a full turnaround from traditional opportunistic offshore strategies, said one property expert.
Michael Flynn, global head of institutional business at Cordea Savills, said a growing trend among local investors is their interest in core property assets overseas - a previously unheard of strategy.
Australian institutional investors traditionally preferred to keep their core investments locally, while allocating 100 per cent of their international property mandates to opportunistic or value-add investments offshore.
However, investors have learned that allocating 10 - 15 per cent of their portfolio to high risk international property altered the risk profile of their entire property book, subsequently exposing them to market crashes such as the GFC, said Flynn.
"A few of them have realised that if that trend continues… they are actually changing the risk profile of their property portfolio.
"What we're seeing now is a trend where some of these super[funds] are saying that we shouldn't be mirroring our domestic Australian investment strategy in the international market.
"We should be doing 70 per cent core, 30 per cent opportunistic," he said.
It is a trend international property managers should keep a close eye on should they wish to win mandates from the local institutions, he said.
Flynn's comments follow the recent launch of the Cordea Savills UK Income and Growth Fund - an open ended UK commercial property fund.
The fund is managed by George Tindley, who has outperformed the UK market in 20 of the last 21 years with his management of a discretionary FTSE 100 pension scheme.
It has a target size of £1 billion, and will invest in prime assets across the main commercial sectors, including office, retail and industrial.
Flynn is currently in discussions with Australian institutions about investing in the UK property market and the fund.
Ruth Liew
This story was found at: http://www.financialstandard.com.au/news/view/28090
Printed: Wednesday, 8 September 2010 7:13am