Why Aussie property could be in for a period of sustained growth

"Real estate is a long-term investment. It creates wealth over a long period of time," he says. 

"There'll always be cycles and volatility in periods, but what we see is those cycles and those periods of volatility are relatively short term, maybe two years, and then you see sustained growth coming back. There's always a period of adjustment and re-stability, post-some volatility." 

Recent volatility, as discussed in the introduction to this piece, has really been caused by two factors: COVID-19 and rising interest rates. 

"That appears to be stabilising and that, we believe... will reset a new benchmark for future growth going forward," Baliva said. 

Baliva argues the outlook differs depending on each sector, but believes there continues to be demand for housing, logistics and medical.  

"Housing as a result of population growth and an undersupply. Logistics because of the proliferation of consumer spending online. And also, medical, with an ageing population as well," he says. 

"There's always going to be continuing underlying demand and income growth coming from those sectors." 

On the other side of that, commercial office assets remain uncertain over the next 12 to 24 months. 

"The level of underlying demand is still playing itself out post-COVID with people working from home," he says. 

That said, there are still opportunities in that space for discerning investors, he adds. Retail property, in comparison, has started to stabilise. 

"In our view, there's a period of stability coming for retail investments," Baliva explains. 

"We see those opportunities where you can actually repurpose real estate, particularly in the area I focus on, in retail, where we look at how we can repurpose retail for alternative uses that have that underlying demand." 

"Given where construction costs are at the moment, competition is probably less of an issue nowadays because it's unlikely you'll get a lot of new competing developments," Baliva says.

"Our preference most definitely is to buy existing real estate investments where that competitive advantage will make sure that your income is sustainable through the cycle." 

Once acquiring an asset, the team has an internal model, where it undertakes development, management and leasing in-house. This includes engaging with tenants and clear strategies to ensure the firm delivers its target investment returns for its clients. 

To measure success, the team uses the below metrics. 

• Income: How is rental growth being achieved? 
• IRR: Internal rate of return (income growth, capital growth and time).
• ESG: What social outcomes can these assets have in their communities? 

Elanor is eyeing other investment management businesses

Elanor Investors Group acquired the Challenger Real Estate Investment Management platform in July, which has doubled the firm's investments under management to over $6 billion today. 

"We're pretty comfortable with and happy with the growth that we've been able to achieve recently," Baliva says. 

"We'll continue to focus on the sectors where we have a differentiated capability, which are retail, mixed-use, commercial real estate, healthcare, hotels and tourism and leisure assets."  

"We think that's a very active opportunity for us that we are looking at, so we can continue to grow, not organically through acquisitions of additional investments, but through acquiring additional investment management platforms," Baliva says.