Dexus chief Darren Steinberg says the company has prepared well for a period of tougher times. His new shift into infrastructure should help too.
Jessica Hromas
“The global trend among pension capital is for fewer, deeper relationships,” he says. The real estate and infrastructure asset classes are already closely linked – think of the way airports, aged care and student accommodation offer aspects of both – and shifting Dexus’ focus to real assets should help make capital stickier.
There is interest in Australia, given its solid record of economic growth and predictions for a return to population growth, and Steinberg has seen almost 30 groups from the Middle East, Europe, US and Asia since January. There’s plenty of capital on the sidelines, he says, but no investor wants to be the first mover in an environment where there is a gap between what sellers want and what bidders are prepared to pay.
“I’ve been calling a pretty challenging time for at least 12 to 18 months now. We all knew the free money couldn’t last and we were going to get back to normal. It all happened a lot quicker than anyone anticipated.”Steinberg says it’s important to keep historical context in mind. For most of his career, commercial property returns have been between 7 per cent and 9 per cent. As rates plunged and asset values rose, those returns went down to between 5 per cent and 6 per cent.
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