Comment on performance
Our Property investments include properties such as shopping centres, office buildings and factories. We invest through property trusts when we believe these have the potential to deliver good investment returns. The property trusts may be listed or unlisted and may include both Australian and international investments.
Like shares, the long-term trend in property prices is upwards, but the market can flatten out and even be negative, particularly if there are sustained rises in interest rates. Historically, returns have been higher than bonds over the longer term but with higher risk.
Comment on risk
Some people often get the sense that property prices never go down. We feel comfortable with ‘bricks and mortar’ investments because, among other things, they include our own home.
However, there are risks associated with property investments, linked to economic drivers like employment levels, consumer confidence and, in particular, interest rates.
With some exposure to overseas property, there is the added potential for volatility caused by fluctuating currency exchange rates. If you are investing in overseas markets in Australian Dollars, the value of your investment will decline if the Australian Dollar’s value increases substantially against other currencies. Of course, the opposite is true if our Dollar’s value declines.
To offset this risk, some super funds, including Equipsuper hedge against currency fluctuations^.
The long-term growth of property makes some investment in it an important part of an investment strategy extending over five years or more. You may experience some years of zero or even negative returns in property but, if you can invest over time, it will generally deliver a positive return.
