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Investors recognising the benefits of joining forces

Wednesday, 23rd Jun 2021

Each year, Momentum Wealth conducts a property sentiment survey that seeks to understand the goals, motivations and risk factors impacting property investors across Australia.

Results from our 2021 survey have revealed a growing interest in pooled investments and property funds amongst investors, with 68% of those surveyed saying they would or already had pooled money with other investors under a professionally managed fund in order to access larger investment opportunities.

Commercial property and large residential developments are two advanced investment strategies that are commonly accessed through investment funds. Both of these asset types are popular amongst experienced investors, however they have traditionally had significant barriers to entry for individual investors.

This pooling of capital gives these investors greater buying power, allowing them to gain access to advanced investment opportunities that they often wouldn’t be able to access on their own, which is one of the major benefits of pooled investments.

Property funds and pooled investments make it easy for investors to diversify their portfolios across different asset classes, property types and industries. Investors are increasingly looking to introduce diversification into their portfolios due to the current climate of uncertainty around the world.

Commercial property proving popular

Results from our survey have also shown that investors are becoming increasingly interested in commercial property, with 71% of those surveyed expressing interest in the sector. Further to this, 80% of those who were interested in commercial property would or already had considered accessing this segment through a pooled fund.

Commercial property is typically favoured by income-focused investors or those seeking opportunities for diversification in their property strategy through higher-yield investments. Investors with a strong portfolio of residential properties will often look to the commercial property sector to target income-producing assets that provide higher cash flow and balance the existing growth assets in their portfolio.

Although popular, commercial property has historically been out of reach for most investors due to the high acquisition costs of quality commercial assets. However, investors are increasingly aware that property funds allow access to high quality commercial assets at a lower capital outlay and with the potential for stronger returns.

Demand for development funds on the rise

Pooled investments aren’t reserved exclusively for commercial property; in fact, over half of the respondents expressed interest in pooled development funds.

Development is a popular strategy amongst experienced investors who are looking to build equity quickly or generate a rental yield from properties they’ve built without the development margin. While many investors are aware of the potential benefits of development, many are simply too time poor to undertake an individual development, while the capital outlay and risks are also barriers to entry.

The benefit of pooled investments is that they offer access to high-quality, large scale residential development projects with lower capital outlay. These pooled funds allow investors to diversify their portfolios while also reducing their risk exposure thanks to the opportunity to spread their funds across multiple projects.

Another benefit of development funds that is helping to attract investor interest is their professional management. Development projects can be time consuming and difficult to manage, and the professional management from feasibility through to project completion is attractive to time-poor or inexperienced investors.

 

For investors who have progressed through the initial stages of their investment journey, pooled investments can provide a great opportunity to further strengthen their wealth position through exposure to sophisticated investment strategies. To register your interest in our latest funded investment opportunities, visit our residential development and commercial funds pages.

 

All data and results have been compiled by Momentum Wealth and while all due care has been taken to represent true and accurate information it may not be a true reflection of the market or audience. Momentum Wealth does not provide financial, tax, legal or accounting advice. This material has been prepared for educational purposes only, and is not intended to provide, and should not be relied on for financial, tax, legal or accounting advice. You should consult your own independent advisors before engaging in any transaction.