Know your Markets: Listed vs Un-Listed

Listed vs Un-Listed Real Estate

Listed property investments generally refer to units of REITs, which are bought and sold on an exchange, such as the ASX, in the same way you would buy shares in a company.

Unlisted property investments refer to direct property ownership or investment in unlisted property funds. Unlisted property funds are managed by a fund manager who pools together funds from investors to buy and sell assets.

The Question is....what's better?

The Reality is they both perform very differently.

Listed property trades daily on a stock exchange, meaning investors are buying and selling securities based on their own valuation of the underlying assets, which may also incorporate future expectations of economic conditions

Unlisted property where the underlying assets are valued by independent professional values on an infrequent basis, usually quarterly or annually. The economic assumptions used by the independent valuer may differ to those of listed market investors, leading to divergent opinions on the current price of the assets, and hence different return outcomes for investors. Unlisted assets may also be valued based on comparable transactions, where the valuer uses the sale price of similar properties sold recently as the basis of their valuation.

What about Blending the Two?

A blended approach can help investors benefit from the potentially increased returns and lower volatility of unlisted real estate, without committing their whole allocation to an illiquid investment vehicle.

Conclusion

Both listed and unlisted property investments are important for diversifying investment portfolios. They offer exposure to real assets with potential for long-term growth and steady income. Before investing, it's crucial to consider factors like accessibility, diversification, liquidity, transparency, and control over assets. Economic changes can affect these investments differently, with unlisted funds possibly offering better protection from risks.