What’s Hot, What’s Not in Commercial Property with Jason Huljich
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What impact do tariffs and inflation have on commercial property?
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Tariffs, inflation, geopolitical tensions. In today's episode, we're going to find out what it all means for commercial property and where the opportunities might lie. Welcome to Equity Mates, a podcast where we explore what's possible in the world of investing. If you've just joined us for the first time, my name is Bryce. And as always, I'm joined by my equity buddy, Ren.
How are you going? I'm very good, Bryce. Very excited for this episode. One thing that we love about the share market is that it gives you access to more than just shares. And through different vehicles, you can access all kinds of asset classes. And today we're talking about one of the world's largest asset classes.
What has changed in the commercial property market since the last visit?
And at least according to this guest, one of the world's most exciting asset classes. That's right.
We have in the studio, co-CEO of Centuria, Jason Hulich. Jason, welcome.
Thanks for having me again.
And we're exploring commercial property. We are. A very exciting asset class. You have $22 billion in assets under management, operating and owning 400 buildings across Australia. So very prominent in the space. And we are going to unpack what the current market conditions mean for commercial property and where you're trying to find opportunities. A massive thank you also goes to Centuria for sponsoring today's episode. Now, Jason, you joined us in October last year. Since then, what's one thing that you've changed your mind on?
Yeah, look, I think last time I was on was October last year.
How do interest rates and inflation influence property investment?
Times were very different. We'd had three interest rate cuts. The real estate listed markets were up. It looked like we were going to have a really nice, stabilised period for investment across most asset classes, including real estate. Now, since then, we've had two interest rate rises. It moved very quickly from cuts to increases. We had war breakout. We've got massive geopolitical risk. Inflation looks like it's heading the wrong way. So times have definitely changed. So from thinking, you know, if we just think six months ago, it was looking pretty rosy. It's a pretty volatile place right now.
Now, Jason, you have a great view of what's happening across the commercial property landscape. You've got a number of unlisted property funds at Centuria, but then you've got two listed property funds as well. An office REIT, COF is the ticker, and an industrial REIT, CIP is the ticker. So you've got, I guess, a great overview of what's happening across the industry. Bryce in his intro said, you know, there's a bunch of stuff going on, tariffs, interest rates, global trade tensions. I guess for a commercial property investor, how's all of these big macro stories, these big news headlines flowing through to the commercial property space?
Sure. Look, I'll give you two words, which is inflation and rates. Real estate is very intertwined with rates. And the reason is, be it listed or unlisted, most real estate has some form of gearing against it. So if you look at the rates, rate gearing is usually 20% to 30%. Unlisted might be 30% to 50%. You've borrowed debt against the property, just like a residential mortgage, 80%.
What should investors watch for in the current market?
So what happens is if inflation's up and the Reserve Bank wants to cool down the economy, they lift rates, we all know. And what that means is higher interest costs for your property investment. So there are ways to hedge. So a lot of our funds are hedged. So they might lock in the interest rate for three, four or five years, which means it doesn't really matter what happens with interest rates during that term because your rate's fixed. But other funds have the hedging coming off or you're buying a new property. You've got a higher cost of interest, then there's less profit coming out of the property. right? So you see it first in the listed markets.
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Chapters
8 chapters
1
What impact do tariffs and inflation have on commercial property?
0:00–0:52
2
What has changed in the commercial property market since the last visit?
0:52–1:34
3
How do interest rates and inflation influence property investment?
1:34–3:07
4
What should investors watch for in the current market?
3:07–5:25
5
How can investors benefit from buying during market downturns?
5:25–8:00
6
What opportunities exist in industrial, logistics, and data centers?
8:00–13:06
7
How do listed and unlisted property investments compare?
13:06–16:08
8
What sectors of commercial property are currently thriving?
16:08–32:34
Speakers
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