Residential real estate has long been a staple for those looking to invest in a tangible asset, but times are changing.
The past year has seen residential property values soar beyond the reach of many investors. Along with this, sweeping legislative and regulatory changes, many of which have been put in place to dampen the residential real estate market, making life increasingly difficult for those investing in homes.
Many investors have been left in awe of what to do with the money that languishes in the bank. This is where commercial property can be a boon.
While not as widely understood as residential investing, commercial real estate offers investors a tangible ‘bricks and mortar’ style investment. capital gains.
It has been shown to be resilient during times of major economic instability, including Covid-19, and is generally not subject to the same sentiment-based volatility that investors experience in the stock market.
So what exactly is a commercial real estate fund?
Rich Lyons is the Retail Investment Manager of Oyster Property Group (Oyster), a leading commercial real estate and fund managers. He says those new to investing are often confused as to what is involved when it comes to business investing.
In a nutshell, it’s about buying commercial property in small amounts alongside other investors – without the hefty expense of getting into residential real estate.
Oyster has been in business for over 20 years and is well regarded as a “one stop shop” for commercial real estate investing.
The group acquires significant quality properties in the office, industrial and retail sectors, which are managed by a team of dedicated internal property managers. They then prepare offers for investors and manage the funds on their behalf.
With an entry point of just $ 10,000 and cash distributions in the range of four to six percent per annum, payable monthly, this is an attractive option for investors.
Lyons explains that Oyster’s criteria for purchasing commercial properties are strict. In the case of large-format retail, it targets premises occupied by supermarkets and DIY stores, for example, which can remain productive in difficult times. Covid-19 provides a prime example of the adaptability of large retailers – while small retailers have had to close their doors in recent closings, supermarkets have remained open for business.
And DIY stores, while closed during level four, could easily pivot to offer click-and-collect services below level three. The queues of cars in the parking lots of stores such as Miter 10 are a testament to Kiwi’s constant love for DIY.
“It really strengthened our beliefs that large format retail is a desirable option because occupants are able to weather storms,” Lyons explains.
Equally robust is Oyster’s proprietary purchasing strategy. “We are looking for properties in desirable locations, close to airports and national highways, where appropriately zoned land is scarce,” Lyons explains.
“Oyster’s overall investment philosophy is to target quality commercial properties that have constant occupant demand, are well located and close to amenities, and have reputable tenants. “
Oyster has three key funds: Oyster Direct Property Fund, Oyster Industrial and Oyster Large Format Retail Fund.
The Oyster Direct Property Fund is an unlisted diversified commercial portfolio PIE fund that is regularly open to investors and provides exposure to over $ 1.1 billion in commercial property. This fund has a minimum investment of $ 10,000 and a diversified portfolio that may appeal to investors who like to spread their risk.
Oyster Industrial, launched in 2019, offers a pure industrial real estate portfolio and currently contains six properties leased to quality tenants. Oyster Industrial opens up to investment as new assets are acquired. The minimum investment is generally around $ 50,000.
Oyster Large Format Retail Fund, launched by Oyster in 2021, aims to provide investors with diversified large format commercial real estate exposure over time. With a focus on supermarkets and DIY stores (which have proven to be very successful), it has a minimum investment of $ 50,000, with offers listed on the website.
Lyons explains that the main advantages of investing in Oyster funds are access to monthly income from assets that are generally beyond the reach of ordinary investors, supported by hands-on management by a team of seasoned experts.
He said commercial real estate generates passive monthly income for investors – this frequency of income is generally not available in the equity market – and offers a much lower entry point than residential real estate (you certainly couldn’t find anything for $ 10,000).
“Choosing to invest in commercial real estate through a team of experts like at Oyster also avoids the hassle of managing tenants,” Lyons said.
“So, for people looking for an investment that will help them supplement their other sources of income, or for those looking for a long-term stable investment option, Oyster’s unlisted commercial real estate funds are a great option. “
To learn more about Oyster’s investment opportunities and for a chance to win one of two $ 1,000 investments in the Oyster Direct Property Fund, visit the Oyster website: oystergroup.co.nz/ chance to register your interest.
Oyster Management Limited is the issuer and manager of Oyster Large Format Retail Fund and Oyster Direct Property Fund