March 28, 2021

Interest.co.nz: Opportunities in commercial property

The post-COVID world of investing is highlighting exciting alternative opportunities, as businesses pivot to profit from rapid change and new ways of working. The Syndex platform is where these opportunities live.

As we witness empty offices and depopulated CBD’s, investors could be excused for looking at commercial property investment opportunities differently.

COVID-19 has certainly bought on some swift changes to the way we work at our desks, but how long-lasting the shift will be is yet to be seen.

There are other events that have caused businesses to quickly enact work-from-home contingency plans - they have been rolled out in times of earthquakes, power cuts and even in response to the Auckland Harbour Bridge scenario last September. So far history points to people returning to their offices - even New Yorkers returned to the city after the Twin Towers collapsed. Current media says otherwise, but time will tell as populations become vaccinated and normalcy resumes.

Hesitancy in the future of office space shouldn’t give rise to blanket concern over all commercial property.

A well-spread investment portfolio is seldom without some sort of property element and we tend to neglect the diversity within its class; residential, industrial, hotels, retail and office.  COVID-19 is impacting each category in different ways and even those in what might be considered the darker shadows should be judged on their own merits.

Within this property class we see various investment structures. From open-ended funds, to established and tenanted retail space, to farm or other growing land and infrastructure, to mortgage funds and more. The Syndex marketplace has seen all manner of offers that suit different investor objectives, be that regular income, capital gains, or exposure to long term responsible investment assets.

More frequently we’re seeing the primary sector utilising commercial property type structures to raise capital.

MyFarm, specialising in primary sector land-based investments, have developed a number of land and income-based opportunities with examples in kiwifruit, manuka and viticulture. These opportunities separate the land from the operations of the business, therefore reducing the investor’s exposure to operational and product price risk. Within these offers are aspects of operation ‘readiness’, thereby offering differing levels of risk for investors to consider, from low-risk well-established orchards or farms, to investments where there are elements of development.

Another example of the evolving agri-investment landscape is New Zealand Rural Land Company (NZRLC). A recent public listing, NZRLC is building its business through pastoral land purchases. The land is leased to experienced operators which gives the investor land exposure with reduced risks associated with the operations or commodity price.

Another pandemic-induced trend, that of exponential growth in online shopping, has put intense pressure on warehousing supply. In the US warehouses are suddenly among some of the hottest real-estate assets. This squeeze could give rise to new developments and a reshaping of our city fringes. This could either exacerbate local property markets or bring attractive yield offerings.

The experience at Syndex is that there remains strong interest in a full range of commercial property listings, with some offers oversubscribing in a matter of days. Where interest rates are exerting downward pressure on property yields, investors will be looking hard at all offers. Last week the landscape changed for those considering residential property as an investment class, providing more reasons for bringing commercial property into sharper focus. At a time when all investors need to keep their capital working, all opportunities are worth scrutinising.

Read the full article from March 2021 in Interest.co.nz here.

Ross Verry

Ross Verry is CEO of Syndex and a shareholder. The views expressed above are purely his own. Please assess and research all your investment.

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