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Caution urged on US property markets
Australian super funds need to be mindful of a growing wave of funds moving out of popular global property markets like New York and Houston when considering their own global property portfolios, according to AMP Capital fund manager Tim Fallet.
"Gateway" markets were not overpriced, but it was getting harder and harder to make returns on a core office investment stack-up, Fallet said.
It was a theme that has been building over the last six to nine months and is gathering more and more steam, he warned.
There is a wave of money that can't get into gateway markets and is instead being sent to top-tier secondary US markets such as Seattle, Tampa and Sacramento, which were the next level of capital, he said.
There are far better risk-adjusted returns for some of the secondary markets in the United States, Fallet said.
AMP Capital was seeing larger and larger dollar volumes sent into these areas, he said.
However, the properties had to be taken on a case-by-case basis and institutions should not be exiting gateway markets completely, he added.
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