Investec eyes offshore property bargains

Johannesburg – Investec Property Investments is planning to launch a new fund that will invest in large, global real estate firms, its head of research Kundayi Munzara told Fin24.com on Wednesday.

Although the global property markets have recently started to offer yields matching those of pre-recessionary levels, Munzara said Investec remained confident cheap and valuable offerings were still to be found.

"I don't think bargains are over," said Munzara. "There are a lot of properties that will be coming to the UK market over the next few years, likely to accelerate around 2012."

According to him, about $250bn's worth of property debt expires in the next two to three years in the UK, where the banks are committed to lowering their exposure to these assets.
 
He also said there are some areas in the UK that can offer yields of between 7% and 8%.

Investec Properties already offers an international property fund - the Investec GLL Global Special Opportunities Real Estate Fund.

During the global clampdown on credit lending, international real estate prices showed sharp decline. UK-listed Liberty International (now the demerged entity Capital and Counties and Capital Shopping Centres) posted losses of up to 50% between June 2007 and June 2008.

The drop in property prices pushed yields to higher levels, which made offshore investment an attractive offer to South Africans used to yields of between 6% and 8%.
 
However, Catalyst Fund Managers analyst Jamie Boyes said the easy money in offshore property has to a large extent already been made.
 
"Yields in both the listed and direct property markets have already moved in significantly - if you're looking to double your money in a year, you're too late," he said.
 
However, Boyes said the global property market can still offer a decent return to investors over the medium to long term.

Catalyst research showed that $23bn Australian property behemoth Westfield Group's yields of 8% a year-and-a-half ago have contracted to about 6% this year.
 
According to Lourens Coetzee, investment professional at Marriott Asset Management, local property offers higher yields at the moment, but investors may be better served putting their money offshore given South Africa's long-term inflation pressures.
 
"Offshore property markets are delivering a real yield of between 2.5% and 3.5%, but for a long-term investor it is priced fairly," he said.

 - Fin24.com