Decreased productivity in China is likely to affect the Australian property market in months to come, meaning investors should be selective and diversify in terms of the markets and sectors they invest in, according to a property fund manager.
Trilogy managing director Philip Ryan told Investor Daily that while recent cuts to interest rates would be stimulatory for the residential property market, declining productivity figures in China as a result of coronavirus, which has now seen almost 110,000 cases worldwide based on World Health Organisation data, could have flow-on effects locally.
“In China, if you look at their PMI rates for last month you’ll see an even market is 50, people were expecting [the data] to come out around 40 but in fact it was around 35,” Mr Ryan said.
“You contrast that to the depths of the GFC and that’s where China was at that particular point.
“You’ve [also] got to look at implications from the effect of China slowing down manufacturing [and] how that will play out in markets over here. One of the things I was reading about today is there is a problem importing elevators out of China which is going to have implications for high rise projects.”
In terms of areas of the market where there were opportunities for growth, Mr Ryan said south east Queensland represented a buying opportunity as it had not seen the same volatility as bigger capital city markets.
“If you look at our helicopter view of the Australian property market, Sydney and Melbourne have been steady, they’ve recovered from where they were last year but arguably you could say they’re quite heated markets,” he said.
“South east Queensland hasn’t had the benefit that Sydney and Melbourne have had in recent times, in fact if you look at post-mining boom Brisbane has been in the doldrums. [But] we’re seeing green shoots in terms of buyer inquiry and investor demand, whereas last year investors were pretty scarce on the market.”
Mr Ryan said investors should consider getting exposure to property through active managed property trusts as well as directly, as a diversified approach was preferable in the current market.
“One advantage [of active management] is diversification, for example in our industrial property trust the properties we buy are pooled, and as a result our investors get the benefit of the overall performance of the portfolio, whether they be assets in Mackay or South Australia or the Gold Coast,” he said.