Why industrial real estate is so attractive right now
Plumbing World, 101 Mclaughlins Road, Wiri, Auckland. One of the properties in the Oyster Industrial portfolio.
Even in times of economic volatility, certain asset classes can remain resilient. As stock prices plummet, the industrial property sector has continued to deliver consistent performance for investors, producing the best returns in New Zealand’s property sector for the past 15 years.
James Molloy, chief investment officer at New Zealand Commercial Property and fund manager Oyster Property Group, talks about the industrial property sector and explains how it remains a promising asset class for Kiwi investors.
Oyster’s PIE fund, Oyster Industrial, which invests in industrial real estate, has generated exceptional returns for current investors, delivering an annualized return of 11.1% from inception through December 31, 2021.
There are so many investment options. Why choose industrial real estate?
Industrial property has been a constant player in the New Zealand property market for 15 years. And there is a clear path to continued growth.
Its success is based on the low vacancy rate, the steady growth in rents and the limited supply of suitably zoned land available for development.
These fundamentals, combined with stable monthly returns, capital gains potential and Oyster’s ability to select well-located industrial properties with high-quality, long-term tenants to create a diversified income stream, make industrial real estate an attractive opportunity for investors.
How has the current market volatility affected your investments?
Rising interest rates are a key objective, and we are looking at how to manage this, whether that means restructuring some of our debt, paying it down, or taking advantage of acquiring high-yielding properties in the future. ‘coming.
What fundamentals should I look for when investing in industrial real estate?
As with any investment, it’s important to understand your risk profile and then think about the kind of return you want. For example, Oyster Industrial offers stable monthly cash returns. You should also consider the quality of the investment and the assets behind it. What’s in the fund? Is it well diversified?
How does Oyster help clients make the most of investment opportunities in the industry?
We are different from many investment firms because we are a fully integrated manager, which means we provide a one-stop-shop to manage the entire commercial real estate lifecycle.
We have our own property management, facilities management and asset management team. Unlike some other investment providers, we do not outsource these functions.
We’ve been doing it for over 20 years and we’ve built a strong track record of performance, execution and delivery. We live and breathe commercial real estate. We continuously assess the market, our assets and what interests our investors and from which they will derive value.
We want as many Kiwis as possible to share in the benefits of commercial real estate, so we work hard to simplify the path to investing.
What does the future of industrial real estate investment look like?
In the longer term, I think we could start to see multi-storey industrial warehouses in New Zealand, following similar trends in Asia and around the world. Particularly in constrained terrestrial environments such as Auckland.
Moreover, amid the rapid growth of e-commerce, last-mile logistics will become more important. Industrial locations will be needed closer to urban centers to help parcel carriers deliver products to consumers and complete the “last mile” of a delivery journey.
Learn more about Oyster’s current offerings, including Oyster Industrial, which is currently reopened for investment, at oystergroup.co.nz/invest
Oyster Industrial Limited is the issuer of the shares.