Malay-Singapore based property investment fund Aquaint Capital, which quietly listed on the ASX in November 2013, is open about its strategy of making money in distressed economies – and is now looking to Australia for its next property investment opportunities.
Aquaint is invested in property all around the world, operating on a principle of entering “distressed” markets when others are running for the hills.
Company CEO Yang Po Tan said the company’s strategy is to look for niche investment opportunities. In Australia she believes the niche includes assets between $10 million and $100 million.
“Because we like to invest in distressed economies, so to speak, so when the government is saying the economy is struggling that’s good news for us,” she said. “It means the economy is slowing down, that means property prices are coming down and that’s opportunity for us.”
Tan said the company sees Australia’s property market as an opportunity to make some cash because it is expecting it to slow down as the economy weakens with slowing Chinese demand for resources.
“Right now there has been a slowdown in the property sector in Australia [in that higher asset class],” she said. “In terms of property investment as a whole. The economy is going down in Australia because of China.
“Now that the China demand is slowing down the economy of Australia is also slowing down.”
During the GFC, Aquaint scrambled to invest in Europe and the US to buy commercial property and land parcels “dirt cheap”.
“We like to invest when the market is down, so when they recover we have a lot more to gain,” she said.
“Where there’s distress or turnaround cities that’s where we are.
“We went in and now the market is recovering everybody is starting to go in but we are already cashing out.”
Tan classed Sydney, Melbourne and Perth as “mature” cities because of the amount of foreigners, education and job opportunities available.
“In these areas we want to invest a little bit out in the outskirts of the main city area because the main city area is already quite expensive,” she said.
Brisbane on the other hand is a growing city, Tan said, pointing to the growth in companies headquartered in the Queensland capital.
“For places like Brisbane we would target places in the main city area because I think the cost is still relatively cheap compared to the other three cities,” she said.
Tan said while Sydney, Melbourne and Perth are “not quite distressed yet” the three are certainly on the downturn.
“But because they are fairly mature cities even if they are on a downturn they will turnaround very quickly,” she said.
“Currently we are looking at commercial property that gives good yield,” she said, adding it’s on the lookout for office buildings, small residential developments and budget hotels with a net 6 per cent yield.
Tan explained the budget hotel space is more resistant to property cycles, especially with the emergence of budget airlines.
“A lot more people are travelling,” she said, adding the demographic is driving the trend is retirees who are after a little more comfort but don’t want to send a lot of money.
“This is a huge growing sector,” she said.
Aquaint said usually it holds onto cash flow assets for about five years but chases a faster turnaround of between three to four years on its smaller 100 to 200 dwelling residential development projects.
Tan said in New South Wales Sydney Olympic Park is a stand out suburb because of the lifestyle factor, adding the outdoors, proximity to the city, shopping centres, waterways and recreational facilities are all a big plus for her.
While over on the west coast, Tan said housing development projects “have a bigger appeal”.
“A lot of Asians like to retire in Perth,” she said. “We are not so particular about the suburbs but we are looking potentially anywhere that is half an hour drive from the main city area”.
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