SA MARKET OVERVIEW
SOUTH AUSTRALIA
Sam Alexander - Investment Sales – SA Cushman & Wakefield Adelaide
blood donation clinic leased long term by Red Cross Australia. This property was quickly snapped up prior to Auction by a Victorian based private investor on a yield of 5.4%, who saw the clear value in a well-located property with a secure income stream from a government funded essential service tenant. There is definitely cautious optimism out there about the commercial property market so assets with security & lease terms that extend pass the current interest rate cycle are clearly being targeted by astute investors. In terms of capital, what’s driving investor interest into alternative asset classes over & above more traditional real estate sectors. There’s no doubt interest has shifted in a strong way to alternative asset classes. It allows investors & fund managers to diversify & ‘hedge’ their portfolio, especially whilst other segments of the market are momentarily out of focus for the bulk of capital. Many alternative sectors have demonstrated strong resilience, proving less vulnerable than several core sectors that are simultaneously grappling with structural shift. The essential nature of services such as education, healthcare and aged care assets have supported the medium to long term outlook on investments despite current short-term headwinds in the market. Low levels of supply continue to prove a key factor as demand clearly outstrips supply for prime assets. Based on your conversations with clients, what are the benefits of investing in alternatives & to what extent has the more defensive income profile & stable nature (portfolio hedging) of these assets been a drawcard, particularly for new investors.
Thank-you for the opportunity to share your insights as part of The Property Development Review publication - what are the key trends occurring across alternative asset classes (healthcare, student accommodation, self-storage, co-living or life sciences) so far in 2024. Thanks for having me. There’s a definite push into the alternative asset classes as we see some of the major funds put a key focus, building investment teams and running capital raising processes throughout 2023 and into 2024 to secure deals within this segment of the market. The living sectors continue to witness strong investor interest. BTR remains the focal point of the living sectors with the Australian sector gaining several new participants in 2023 including Charter Hall, Brookfield and Stockland leading to over 20+ institutional managers now active in the sector. Reflecting on the deals that you’ve transacted in the first half of the year, how are you observing market sentiment amongst commercial property investors & do you anticipate any material shift in sentiment or activity over the course of the next six months. There is still significant capital out there looking to be placed, investors are just overtly cautious & rightly so, as we navigate life in the post-covid world. Rising rates and the outlook on inflation are very common discussions were having with investors out there. Defensive assets with strong covenants and long leases have been very hotly contested, especially in inner metropolitan locations and we don’t forsee any material change in this. A prime example is a recent sale of ours in Port Adelaide, SA. The property was purpose-built
SAM ALEXANDER
78 – July / August 2024
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