Zurich senior investment strategist Patrick Nobel questions why people would want to buy an entire street when they should be selective and choose the right property in the right location which can be moved in and out of quickly.
“We have a positive outlook for the A-REIT market but the opportunities are not uniform in our view,” said Mr Nobel.
“For example, we have a preference for REITs with an exposure to residential but are more cautious for securities with exposure to the office market.
“Residential is benefiting from both recovering markets and improving margins whereas office to us is struggling under high vacancy rates and new construction which is adding to supply,” he said.
Mr Nobel said that under-researched and under-owned small cap property securities are offering good opportunities for investors and highlighted the sector had demonstrated strong returns over the past five years.
“Simply taking a passive position belies our strong conviction that there will be a wide dispersion of future returns in the listed property sector,” said Mr Nobel.
“Investors should consider the argument of highly active, nimble management alongside the appeal of the A-REIT market.
“The strong message for investors is to seek out active managers with a proven track record as the market requires specialist skills now more than ever,” he said.
