This is the view of Laurence Rapp, CEO of Vukile Property Fund, who explained to Fin24 how property could be used as an asset class.
“Investing in Reits [Real Estate Investment Trusts] or listed property is very much of a misunderstood asset class,” he said.
“Very often we hear people talking about comparing the return of Reits to equities or to bonds,” he said. “And while it’s important to always look at relative performance of asset classes to one another, it shouldn’t be seen in the sense of them being substitutes or proxies for investing in listed properties.
“Rather, we would encourage investors to look at property as an asset class in and of itself,” he said. “The question then arises, what percentage of your portfolio should be allocated to listed property.”
It's not the home you live in
Rapp said Reits don’t apply to the home you live in. “We’re talking about income producing properties and how much of that portfolio should that constitute,” he said.
Generally, he said, the asset consultants would tell you a minimum of 10% of your portfolio should be in listed property.
“And we would encourage investors to start delving beneath the surface of simply buying the listed security,” he said. “Understand that when you’re buying into a Reit, you in fact become a part owner in a property.
“So the next time you walk into a major shopping centre or an office block or an industrial park and you’re a shareholder in the Reit that owns that property, you're in fact are a part owner of that centre.”
Watch the full interview:
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