PROPERTY

To add credibility to its web presence, we decided Urban CAPITAL Private needed to have a web page dedicated to its property holdings.  In truth, UCP no longer has any investment exposure to residential property. With net resi yields battling to achieve 2% p.a., UCP sticks exclusively to unlisted commercial syndicates, with a preference for industrial and big box retail.  

As an investment thesis, we take the view that Australian real estate is horribly over-valued by any global myardstick and SHOULD inevitably suffer from mean reversion as many western markets have post the GFC in 2008.  Whilst the extended era of cheap money (ZIRP - zero interest rate policy) fuelled by quantitative easing was an effective band-aid for myopic governments focused on the election cycle, we still believe in the fundamental concept that eventually everything has to be paid for.  Flooding markets with government debt to fix a debt crisis is a paradox that we at UCP cannot reconcile.

All that said, we'd be very happy to get this call wrong because it will likely end in tears for many.  Even a busted clock gets it right twice a day and we'll just keep calling the end until we get it right.

Post Script:

With New York set to elect a card carrying Communist as it’s incoming Mayor, clearly some parts of the world are yet to learn the lesson that socialists, and their delightfully unwashed brethren, eventually run out of other people’s money. I have little doubt that New Yorkers will learn this in due course….