Investors, particularly self-managed super fund trustees, need to understand there is more to property than the residential sector, says Chris Smith, head of healthcare and retirement property at Australian Unity Investments.
“Generally speaking Australians are over-exposed to residential property, especially those that own an investment property as well as their home.
“Such investors are vulnerable in that they are overweight to residential property at the expense of other property sectors which are currently performing much better.”
Mr Smith said now is a good time to be investing in a broad-based property portfolio through careful selection of property funds.
“The current move from cash to equities, brought about by falling interest rates, shouldn’t bypass other asset classes that provide growth and income.
“A better re-balancing would be to include a selection of property sectors as well as equities for both growth and defensive reasons.”
For example, healthcare property has the sort of attributes long-term investors should find appealing, Mr Smith said
“As a sector, healthcare is currently producing excellent returns – 11 per cent annualised total return for the year ending December 2012 according to the latest IPD/PCA index -outperforming all other property sectors.
“Indeed, the healthcare sector has outperformed all other property on a one, three and five year basis, driven primarily by strong returns.
“The outlook for occupancy and new builds is also very strong, with demand for healthcare services expected to continue to increase from an increasingly older population and longer life expectancy.”
Mr Smith said that in recent years there has been a lot of attention given to the inability of the health system to cope with demand and successive governments’ under-investment in hospital infrastructure.
“As a result, there has been a recent burst of activity to build or rebuild medical infrastructure which is creating an additional need for support healthcare services such as consulting rooms and other specialist centres. Most of these operate at capacity as soon as they are built.
“Healthcare is a basic need and the demand must increase with an ageing and growing population.
“At one time, people didn’t survive a heart attack, or only had one hip replacement during their lifetime. Now they survive a heart attack or have multiple hip replacements, and may need ongoing monitoring, post-operative rehabilitation, care and treatment for many years.
“Investment in the facilities that provide the increasing number of health services needed makes healthcare property a growth area, as well as a good defensive investment, and should have a place in any diversified property portfolio,” Mr Smith said.
Australian Unity Investments is the funds management arm of financial services, health and retirement living services provider Australian Unity.
Its property funds management business has over $2 billion in funds under management (as at 31 December 2012). Australian Unity Investments’ unlisted property funds and syndicates own more than 60 properties in the healthcare, retail, industrial and office sectors, in Victoria, New South Wales, Queensland, ACT, Western Australia and South Australia.
For more information please contact:
Chris Smith – Phone: 03 8682 4534
14 March 2013