The Affluence Team have been investing in commercial property (think shopping centres, office buildings and industrial sheds) for a long time. But over the past 18 months, we've reduced our property allocation in the Affluence Fund from around 25% of the portfolio to about 10%.
The chart below, courtesy of Investa Office Fund, shows two reasons why.
- Property yields (income divided by property values) are now very close to, or below those reached just before the GFC.
- At the same time, the share of foreign investors (mainly large investment institutions) is also at all-time highs.
The one potential bright spot? If our economy keeps growing well we may see some decent increases in rents, which will help.
Contributed by Affluence Funds Management