A report by Aitchison Consultants has shown that the inclusion of residential property in a portfolio can enhance performance in moderate, balanced and growth investment portfolios.
The report supports property as an inclusive strategy and that residential property with it’s relatively low volatility provides a stable anchor to these portfolio types.
The figures taken over a rolling 20 year period with different asset allocations show a decidedly positive result. A growth portfolio with 20% to real property could be improved by up to to 9.6%, a balanced portfolio with 15% could show a 6.7% improvement and a moderate portfolio with only 10% exposure a 3.7% uplift.
The industry asset allocation average in these types of portfolios ranges from 2.9% to 3.8%.
The statistics were drawn from the average allocation of super fund managers from the Australian Superannuation Survey produced by a number of data providers.
DomaCom CEO, Arthur Naoumidis, said that “DomaCom is the ideal vehicle to control asset allocation in real property without the client’s need to borrow if that is deemed an inappropriate strategy. Ownership can be fractionalised across multiple properties for as little as $2,000 per property so even a $10,000 allocation can achieve diversification in 5 different types of property in 5 different geographic locations.”
He said, “Most financial advisers work with a professional property adviser to identify suitable assets but DomaCom also identify properties that can be crowdfunded. Currently we have a campaign for The Block, a group of high end apartments featured on the Channel 9 program of the same name. The Block apartments are substantial at 240 – 270 2m and will be sold fully furnished”.
“The reason we chose The Block is that historically these high profile properties rent at a premium rate of approximately 4.2%-4.9% which will be mainly tax-deferred as they have substantial tax depreciation schedules, making them ideal for investors. This season the rental estimates are between $2,000 and $2,500 per week with depreciation schedules ranging from $83,000 to $93,000.”
DomaCom believe that a modest allocation to these properties will enhance most portfolios but with the season drawing to a close investor will need to be quick.