Property investors turn to syndication

by NZ Adviser04 Mar 2016
Low interest rates are resulting in property investors turning to syndication to get a better return on their money, according to Fairfax media.

Augusta Capital’s executive director and head of funds management Bryce Barnett said interest in syndication opportunities had been extremely strong. 

"I've been involved for 20 years and this would be the strongest cycle I've ever seen," said Barnett.

"Irrespective of the economic cycle the tenant will have the ability to pay rent and create a return. If the investor tried to accumulate the funds in the bank to buy a building on their own, some would never get there," he said.

Barnett noticed that there had been more interest from younger investors, many who have just gotten across the barrier to entry of the residential market. 

"They're saying 'now we've got a home let's start thinking and investing wisely’."

But for their good returns, property syndicates can be riskier than other property investment choices. 

Property commentator Olly Newland said, "They give steady income and a good return and can be good buying indeed but they offer no control." 

"Most people like to be in control of the property they own. But a percentage of people, especially those who want to give grandma something to live on, they just want a return and are not worried about anything else."

Newland said a particular concern is if an investor wished to get their money out in a hurry. 

"If you own a property you can just sell it but if you're in a syndicate and you want to sell, you have to sell to like investors."

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