A new form of investment in commercial property is being driven by New Zealand's increasing preference for e-commerce and the safety and convenience of contactless home delivery.
Residential real estate might be the first thought of many when it comes to safe-harbour investments. However, managing them is not everyone's cup of tea – and commercial real estate can provide a strong alternative investment proposition for investors looking for reliable returns with no hands-on involvement.
The barrier to entry has typically been the multi-million dollar price tag, says Mark Campbell, Chief Investment Officer of Auckland firm Jasper, which bills itself as a smarter, better way to invest in commercial property.
The company was formed almost two years ago to provide an alternative to the standard property syndication model, he says. It has taken the concept online, employing a "fuss-free and fully digitised application process" to make it easier for investors to own a slice of commercial real estate for as little as $25,000.
"While returns are never guaranteed when it comes to investing, commercial real estate can provide regular monthly income, underpinned by a hard asset," says Campbell, adding that the national post-Covid-19 shift to ordering online is increasing demand for industrial space.
A seasoned commercial real estate operator and fund manager with 15 years' experience in Australasian and European markets, Campbell recently led a $12 billion joint venture with pan-European property investment group M7.
Jasper's most recent offer is the Industrial Income Plus Fund, a private commercial real estate fund that invests directly in a portfolio of industrial properties located in high growth areas, with resilient tenants and longer-term leases. The fund is acquiring three industrial properties, located in Hobsonville, Papakura, and Mangere. The Hobsonville property is new, completed last year. Qualifying and accredited investors are forecast to receive cash returns starting at 6 per cent per annum, paid monthly.
"We want to disrupt the commercial real estate investment space," he says. "We have pulled together a portfolio of properties with strong fundamentals and we feel really comfortable promoting it on our digital platform. We have secured bank funding from ASB and will co-invest alongside our investors, so our money is in with theirs.
"We have steered away from a single asset with a single tenant – particularly due to the economic shocks going on right now. With multiple buildings, tenants and locations, the fund offers investors instant diversification from one simple investment, buoyed by strong market tailwinds. It delivers an attractive risk-adjusted return.
Jasper is looking to attract between 200 and 300 investors to join the fund, together placing just over $15m with the firm.
"While most of our investors intend to lock in their investment for the long term, we are building an online secondary market so investors will have the ability to sell their shares or units – giving improved liquidity to a traditionally illiquid asset class," says Campbell.
"Commercial real estate is one of the most important asset classes for growing long-term generational wealth; most investors have lacked efficient access to this market and our digital platform is trying to solve that issue."
Campbell says an increase in e-commerce and home deliveries, a trend accelerated by Covid-19, means there is growing demand for distribution facilities close to consumers – with more firms needing properties such as those owned by Jasper to reduce delivery time and increase storage capacity.
"Industrial space is seeing an increase in demand – unlike other asset classes such as retail and office," says Campbell. "That's due to some underlying trends that were already in play and which have been amplified by the Covid-19 pandemic.
"The increase in e-commerce adoption coupled with rising government spending – which is ploughing a huge amount of money into infrastructure – is driving increasing demand for industrial assets."
Campbell also says supply chains have been disrupted by Covid-19 with companies holding more stock in case the government imposes another lockdown.
"It all points to strong long-term fundamentals for industrial property," says Campbell, who also points to restrictions on available land for development, meaning growth in new industrial stock is "severely limited".
"When you look at the alternatives for investment – where regular passive income and capital growth are important – then there really aren't many choices," he says. "Commercial real estate investing through our digital platform is a great way for people to build and grow a diversified investment portfolio."
To find out more visit jasper.io.