Aust homes seen as gold-like haven
Australian residential property has joined gold as a safe haven for investors disillusioned with equities and terrified other assets will be eaten away as measures to combat the financial crisis prompt a spike in inflation. So says investment firm Whiterock Capital Partners.
Andrew Donnelly, Whiterock’s chief executive, says: “Speculators consider residential property to be boring. It is not a sexy story. But these days boring is beautiful. Capital preservation is imperative and high returns come second.
“Residential has become more popular as it retains its value.”
Donnelly says such thinking has prompted many risk-averse investors to bet on gold, the price of which has risen over 42% in the past year. With diversification the golden rule of asset allocation, investors are looking elsewhere too.
“Residential property is the highest performing asset class over the last 20 years returning nearly 12% in the 20 years to September 2008, closely followed by shares, which returned just over 11% over the same period,” he says.
“We still see a market that is extremely stable, especially when you look at the comparative price falls in the US & UK. Australian residential is becoming increasingly attractive for institutions seeking long-term, low-risk cash flows.”
Donnelly says his firm has been “inundated” by global funds and institutions wanting access to Australian residential property assets, which is seen as a safe port in a financial storm.
