Purchasing bricks and mortar property may now be harder with the new LRBA rules, but SMSFs can still invest in property via real estate securities, said the co-founder and co-portfolio manager at Quay Global Investors.
Justin Blaess said this investment strategy can still allow SMSFs to invest in property globally through listed companies with the benefit of not having to worry about the administration and costs that come with owning a property.
“We’re investing in businesses listed on stock exchanges that own and operate real estate, so they take care of the maintenance as part of their business operations. Investors get to diversify, and daily liquidity so if someone wants to buy it tomorrow, they can buy it tomorrow, and if someone wants to sell tomorrow, they can sell it tomorrow,” Blaess said.
“It’s not taking money and packaging it up and buying an industrial shed. It’s investing in companies that invest in industrial property, retail, office, all traditional asset classes, through to things such as seniors’ housing, data centres, and everything else you can think of.”
Blaess said investing in real estate using this strategy is much cheaper than owning a direct property which entails not just the purchase of the asset but also paying a property manager and dealing with administration and tax as well.
“I’m not sure that people who were going to buy a unit, for instance, or a small industrial shed would automatically think, ‘Okay, I’ll go over here and I’ll buy an exposure to global listed property’. There is not much awareness around this type of investment strategy,” he said.
Blaess said data centres are currently a “very hot asset class” and they are trading at big premiums.
“At the other end of the spectrum you’ve got office assets and there’s a lot of negativity around office real estate. Obviously we had Covid and work-from-home, now we’ve got AI, and people are worried about what it’s going to do to office jobs,” he said.
“That means that office stocks trade at big discounts to what the valuers say that say the buildings are. However, it is the job of the fund manager to weigh up those risks and the value proposition against other entities.”