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Hewison Private Wealth - Insights
Hewison Insights

A better way to invest in property

Glenn Fairbairn
Director, Partner & Wealth Adviser
24 Apr 2024

When thinking about ways to grow wealth, many individuals consider property a sure and safe bet, and who can blame them given the strength of the property market over several decades.

However, direct property investment has a number of shortfalls, specifically the large amount of capital required upfront. This means that many individuals are unable to adequately diversify their asset base and are therefore reliant on the performance of one asset, in one location, and with one tenant. This increases the risk of their arrangements.

At Hewison Private Wealth, property forms a major part of our client’s portfolios. However, importantly, it is only part of their overall strategy.

40 years of investment experience has highlighted to us the need to invest across various assets classes.

This investment approach minimises risk and smooths returns over time.


So how do we invest in property for our clients?

As mentioned above, the challenge with property is that the entry price is a major barrier to entry, thereby hindering the ability to adequately diversify property exposure.

Therefore, when building the property component of a client’s portfolio, we prefer to invest in single-asset property syndications, preferable across commercial real estate.

A syndication is where you ‘pool’ your funds with other investors to enable you to purchase a property that you would otherwise be unable to in your own right. Further, given the lower investment amounts, there is the capacity to spread property exposure across varying sectors including office, industrial, hotels, shopping centres, hospitals, etc.

As a result, a portfolio value of say $5 million with a target asset allocation of 20% to property could have around a $150,000 invested in up to 7 different properties. Additionally, commercial leases are generally longer term in nature, providing greater certainty of income over the long term.

Over a number of decades we have built a network of high quality property managers that have enabled our clients to invest in some amazing properties. Not only has this reduced the risk of investing in property but has enabled clients to benefit from the advantages of property without the day-to-day hassles of managing tenants and ongoing maintenance.