Direct property investment is gathering pace in Australia but investors here are not yet ready to put money into offshore real estate, Fidelity’s investment director of European real estate said.
Adrian Benedict said his first marketing trip to Australia to discuss the benefits of commercial real estate in Europe and, in particular, the United Kingdom (UK) has so far garnered plenty of interest but no commitments.
He said Fidelity’s Australian clients are some of the most sophisticated real-estate investors in the world.
“They really understand real estate, but I cannot understand why, in one of the most successful economies over the last five years, we are not seeing any meaningful capital inflows from this country into the UK, which is one of the most transparent and liquid markets,” Benedict said.
He said inflows into UK property were coming from the Middle East, the US and Asia, but not Australia.
He added that Australian clients cited foreign-exchange risk as a key deterrent and were unconvinced of the need to diversify.
He said the UK, France, Germany and the combination of Belgium, the Netherlands and Luxembourg, known as Benelux, accounted for 85 per cent of institutional investment in real estate.
“That’s where our focus has been – the core euro zone markets and the UK. That’s where we believe the best risk-adjusted returns are available for real-estate investors.”
He said commercial property in the UK was at a low point in the cycle and added some of the best opportunities were in second-tier office buildings.
Asked whether offices and warehouses in Europe were liquid, he said: “If you’re looking for liquidity, don’t go anywhere near real estate.”
