1 00:00:03,450 --> 00:00:06,610 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. 2 00:00:06,940 --> 00:00:09,440 Sean Aylmer: We've talked about all kinds of investing here at Fear 3 00:00:09,440 --> 00:00:12,840 Sean Aylmer: and Greed from equities to bonds, even fine art, but 4 00:00:12,840 --> 00:00:16,260 Sean Aylmer: few topics are more furiously debated at barbecues and water 5 00:00:16,260 --> 00:00:19,650 Sean Aylmer: coolers than real estate. I wanted to take a closer 6 00:00:19,650 --> 00:00:22,970 Sean Aylmer: look at real estate investing from a global perspective. Chris 7 00:00:23,210 --> 00:00:27,590 Sean Aylmer: Bedingfield is principal and portfolio manager of Quay Global Investors, 8 00:00:27,820 --> 00:00:30,740 Sean Aylmer: which is part of the broader Bennelong Funds Management group. Chris, 9 00:00:30,880 --> 00:00:31,840 Sean Aylmer: welcome to Fear and Greed. 10 00:00:32,110 --> 00:00:33,440 Chris Bedingfield: Thank you very much, Sean. Great to be here. 11 00:00:33,909 --> 00:00:35,970 Sean Aylmer: Why are you in real estate? Tell me. 12 00:00:37,540 --> 00:00:39,860 Chris Bedingfield: Well, I sort of fell into it after uni. During 13 00:00:39,860 --> 00:00:43,930 Chris Bedingfield: the last recession, 1991, really wanted to get into finance, 14 00:00:43,970 --> 00:00:46,769 Chris Bedingfield: stockbroking, and that was a job available for me at 15 00:00:46,770 --> 00:00:50,360 Chris Bedingfield: ANZ McCaughan, an old stockbroker. And it was about the 16 00:00:50,360 --> 00:00:54,430 Chris Bedingfield: time that commercial property was sort of collapsing around Australia, 17 00:00:54,520 --> 00:00:56,670 Chris Bedingfield: in fact, globally as well. And almost took down a 18 00:00:56,670 --> 00:00:58,910 Chris Bedingfield: few of our banks. And suffice to say, it wasn't 19 00:00:58,910 --> 00:01:02,830 Chris Bedingfield: a particularly popular sector for people to cover. So I kind of 20 00:01:02,830 --> 00:01:04,890 Chris Bedingfield: fell into it because no one else wanted to do 21 00:01:04,890 --> 00:01:08,450 Chris Bedingfield: it. The more interesting sectors like paper and packaging and 22 00:01:08,450 --> 00:01:12,310 Chris Bedingfield: tobacco. So I started in real estate back in 1991 23 00:01:12,310 --> 00:01:13,740 Chris Bedingfield: and fell in love with it. 24 00:01:13,830 --> 00:01:15,800 Sean Aylmer: It's only 30 years Chris. It's only 30 years. 25 00:01:16,980 --> 00:01:19,190 Chris Bedingfield: I fell in love with it. It's got its nuances. 26 00:01:19,190 --> 00:01:23,270 Chris Bedingfield: It's got its jargon. And personally, I've done quite well out of 27 00:01:23,270 --> 00:01:25,980 Chris Bedingfield: it. So I've just stuck with it ever since. 28 00:01:26,810 --> 00:01:29,500 Sean Aylmer: And now you're global real estate, I suppose it's a 29 00:01:29,500 --> 00:01:32,470 Sean Aylmer: bigger world global real estate. It's stating the obvious, but 30 00:01:32,470 --> 00:01:35,480 Sean Aylmer: it must be pretty fascinating because you're actually thinking about 31 00:01:35,480 --> 00:01:40,310 Sean Aylmer: all sorts of geographies, economies, lifestyles, culture, all sorts of things. 32 00:01:40,660 --> 00:01:43,480 Chris Bedingfield: Yeah, it's a great job. I love my job. Looking 33 00:01:43,480 --> 00:01:45,869 Chris Bedingfield: at the world of global real estate is a lot 34 00:01:45,870 --> 00:01:49,090 Chris Bedingfield: of fun. And you're right, there's lots to look at. 35 00:01:49,190 --> 00:01:51,330 Chris Bedingfield: You could really get yourself caught in the weeds, as 36 00:01:51,330 --> 00:01:53,770 Chris Bedingfield: it were. We try to just keep it really simple 37 00:01:53,770 --> 00:01:58,550 Chris Bedingfield: and focus on what we see as big long- term themes and really just 38 00:01:58,550 --> 00:02:00,930 Chris Bedingfield: try and focus on those, rather than get too caught 39 00:02:00,930 --> 00:02:03,400 Chris Bedingfield: up in all of the day- to- day noise and 40 00:02:03,430 --> 00:02:05,870 Chris Bedingfield: the distractions, which can sort of send you in the 41 00:02:05,870 --> 00:02:06,930 Chris Bedingfield: wrong path sometimes. 42 00:02:07,180 --> 00:02:09,380 Sean Aylmer: So I want to get to those things, but firstly, 43 00:02:09,380 --> 00:02:13,260 Sean Aylmer: the last 18 months. Everywhere I read, be it European 44 00:02:13,260 --> 00:02:17,540 Sean Aylmer: papers, US papers for sure, certainly in Australia, there seems 45 00:02:17,540 --> 00:02:21,180 Sean Aylmer: to be a real estate boom in industrial and residential. 46 00:02:21,460 --> 00:02:24,359 Sean Aylmer: Obviously retail is struggling a bit and office is mixed. 47 00:02:24,430 --> 00:02:26,950 Sean Aylmer: Why is it that real estate is so hot at 48 00:02:26,950 --> 00:02:27,410 Sean Aylmer: the moment? 49 00:02:28,690 --> 00:02:31,090 Chris Bedingfield: You would have heard a lot of discussion lately about 50 00:02:31,090 --> 00:02:34,950 Chris Bedingfield: inflation, and real estate is a microcosm of what's happening in 51 00:02:34,950 --> 00:02:38,060 Chris Bedingfield: terms of inflation more generally. So what's really happened is 52 00:02:38,120 --> 00:02:41,750 Chris Bedingfield: there's a lack of supply in areas in real estate 53 00:02:41,750 --> 00:02:45,550 Chris Bedingfield: that is pretty short duration to build. So anything that's 54 00:02:45,550 --> 00:02:48,769 Chris Bedingfield: being supplied, new supply this year, had to be built 55 00:02:48,810 --> 00:02:51,060 Chris Bedingfield: last year or it had to be under construction last 56 00:02:51,060 --> 00:02:53,489 Chris Bedingfield: year, if it were. And so when you had all 57 00:02:53,490 --> 00:02:56,859 Chris Bedingfield: of the shutdowns associated with the pandemic last year and 58 00:02:56,860 --> 00:03:00,929 Chris Bedingfield: then the supply chain bottlenecks that occurred during the re- 59 00:03:01,060 --> 00:03:04,590 Chris Bedingfield: opening, you've got this almost perfect storm where demand has 60 00:03:04,590 --> 00:03:08,210 Chris Bedingfield: come back quickly, but supply is not there yet. And 61 00:03:08,210 --> 00:03:10,750 Chris Bedingfield: so we're getting this squeeze, as it were. And it's 62 00:03:10,750 --> 00:03:14,950 Chris Bedingfield: classically in those sectors that you're talking about. So things 63 00:03:14,950 --> 00:03:18,360 Chris Bedingfield: like industrial and housing, which can take six to nine 64 00:03:18,380 --> 00:03:21,989 Chris Bedingfield: months to build. It's also happening in self storage. Rents 65 00:03:21,990 --> 00:03:25,810 Chris Bedingfield: are up 20%, 30% in self storage as well. So it's 66 00:03:25,810 --> 00:03:28,590 Chris Bedingfield: those sectors that are what we say is a short 67 00:03:28,590 --> 00:03:32,240 Chris Bedingfield: duration between shovel and key. So a very short duration 68 00:03:32,240 --> 00:03:35,320 Chris Bedingfield: to build, supply hasn't been able to respond as quickly 69 00:03:35,320 --> 00:03:39,800 Chris Bedingfield: as demand has come back. I don't envisage these big 70 00:03:39,800 --> 00:03:43,450 Chris Bedingfield: booms that are occurring right now to last. So it 71 00:03:43,450 --> 00:03:46,270 Chris Bedingfield: really is just that perfect storm of what happened last 72 00:03:46,270 --> 00:03:47,161 Chris Bedingfield: year and the surge of demand this year. 73 00:03:47,161 --> 00:03:52,240 Sean Aylmer: Okay. So, Quay Global Real Estate Fund invests in a portfolio 74 00:03:52,280 --> 00:03:56,080 Sean Aylmer: of securities listed on stock exchanges around the world. Whereabouts 75 00:03:56,080 --> 00:03:57,950 Sean Aylmer: have you got your money? What do you like at the moment? 76 00:03:57,950 --> 00:04:01,230 Chris Bedingfield: Well, you just brought it up a moment ago. We 77 00:04:01,230 --> 00:04:05,160 Chris Bedingfield: like retail. We're well diversified. We do have some industrial, 78 00:04:05,160 --> 00:04:08,100 Chris Bedingfield: we have some housing and residential. We've done really well 79 00:04:08,100 --> 00:04:10,270 Chris Bedingfield: out of that. We've been reducing that a little bit. 80 00:04:10,270 --> 00:04:13,860 Chris Bedingfield: So looking forward, we do like retail. We think that's 81 00:04:13,860 --> 00:04:17,650 Chris Bedingfield: a very interesting market right now. Shopping centers have been 82 00:04:17,720 --> 00:04:20,740 Chris Bedingfield: on the nose for five, six years now. And there's 83 00:04:20,950 --> 00:04:23,150 Chris Bedingfield: been a bit of a misconception as to what is 84 00:04:23,150 --> 00:04:27,330 Chris Bedingfield: causing that. The easy answer is the Internet's here, it's all e- commerce, 85 00:04:27,330 --> 00:04:29,719 Chris Bedingfield: it's all Amazon. And that's part of the story, but 86 00:04:29,779 --> 00:04:32,240 Chris Bedingfield: hasn't been the whole story. Part of the story is 87 00:04:32,240 --> 00:04:36,159 Chris Bedingfield: also been very weak wage growth, elevated levels of unemployment. 88 00:04:36,480 --> 00:04:40,260 Chris Bedingfield: Just a weak household balance sheet essentially for the last 10 years, 89 00:04:40,260 --> 00:04:43,540 Chris Bedingfield: really since the global financial crisis. And what's happened during 90 00:04:43,540 --> 00:04:47,240 Chris Bedingfield: this pandemic has been really interesting. We've seen huge amount 91 00:04:47,240 --> 00:04:50,920 Chris Bedingfield: of government spending in response to the pandemic and the shutdown, 92 00:04:50,920 --> 00:04:53,989 Chris Bedingfield: and that has lined the pockets of businesses. But it's 93 00:04:53,990 --> 00:04:57,520 Chris Bedingfield: also lined the pockets of households. Household balance sheets have been 94 00:04:57,520 --> 00:05:01,210 Chris Bedingfield: recapitalised in such a great extent, not since we've seen 95 00:05:01,390 --> 00:05:05,390 Chris Bedingfield: since the Second World War really. And our thesis is 96 00:05:05,570 --> 00:05:08,440 Chris Bedingfield: those consumers are busting to just get out and spend. 97 00:05:09,240 --> 00:05:11,210 Chris Bedingfield: I think they're going to get out and spend they're going to travel. 98 00:05:11,300 --> 00:05:13,540 Chris Bedingfield: As soon we get a chance, we're going to travel. And 99 00:05:13,570 --> 00:05:16,969 Chris Bedingfield: the whole sitting in a home and ordering things online, 100 00:05:17,240 --> 00:05:19,969 Chris Bedingfield: I think people might be getting sick of that. After the 18 months, 101 00:05:19,970 --> 00:05:23,260 Chris Bedingfield: they might actually want to go shopping. And we're seeing 102 00:05:23,260 --> 00:05:25,820 Chris Bedingfield: that in the tea leaves already. We're seeing that in the 103 00:05:25,820 --> 00:05:28,890 Chris Bedingfield: United States where it is opening up. Retail sales are 104 00:05:28,930 --> 00:05:32,760 Chris Bedingfield: coming back very strongly. Even in Australia where states haven't 105 00:05:32,970 --> 00:05:35,830 Chris Bedingfield: been shut down like WA and Queensland, we're seeing really 106 00:05:35,830 --> 00:05:38,239 Chris Bedingfield: strong retail numbers. So we like retail. The other area 107 00:05:38,320 --> 00:05:42,589 Chris Bedingfield: I like is healthcare, particularly senior housing. Aging population. It's such 108 00:05:42,610 --> 00:05:46,160 Chris Bedingfield: an easy story to understand, it just requires patience and 109 00:05:46,160 --> 00:05:48,470 Chris Bedingfield: picking the right company. So they're the two sectors we like 110 00:05:48,770 --> 00:05:48,870 Chris Bedingfield: right now. 111 00:05:49,400 --> 00:05:51,620 Sean Aylmer: I always find an interesting, I have lived in the 112 00:05:51,620 --> 00:05:54,659 Sean Aylmer: states at different times over the last 30 years or so, 113 00:05:55,320 --> 00:05:58,640 Sean Aylmer: and malls are kind of destination centres. They have the big 114 00:05:58,640 --> 00:06:00,670 Sean Aylmer: box retailers. So you might go to Costco and do 115 00:06:00,670 --> 00:06:04,700 Sean Aylmer: your groceries and come back. But it's an actual leisure activity. 116 00:06:05,460 --> 00:06:07,790 Sean Aylmer: Where I live, I might go to the beach or 117 00:06:07,790 --> 00:06:09,650 Sean Aylmer: I might go and watch my kids sport or something 118 00:06:09,650 --> 00:06:12,159 Sean Aylmer: like that. That's sort of my leisure activities. Thought it 119 00:06:12,160 --> 00:06:14,920 Sean Aylmer: was interesting, in a lot of cities in the US, 120 00:06:15,029 --> 00:06:18,029 Sean Aylmer: malls were leisure activities. So once things do reopen, and 121 00:06:18,029 --> 00:06:21,470 Sean Aylmer: I think there's a bit of that in Australia too, they're destinations because we're all 122 00:06:21,470 --> 00:06:22,260 Sean Aylmer: sick of lockdown. 123 00:06:22,529 --> 00:06:25,570 Chris Bedingfield: Yeah, the good ones are destination service. Now, they're not 124 00:06:25,570 --> 00:06:31,290 Chris Bedingfield: all good. At one stage in the 1980s, three shopping centres 125 00:06:31,290 --> 00:06:34,799 Chris Bedingfield: were opening every day in the United States. So they've 126 00:06:34,800 --> 00:06:37,710 Chris Bedingfield: got a huge supply problem and they're working their way 127 00:06:37,710 --> 00:06:40,320 Chris Bedingfield: through that. A lot of shopping centres are shutting all the time. 128 00:06:40,779 --> 00:06:43,220 Chris Bedingfield: The really good shopping centres are exactly what you're describing. 129 00:06:43,220 --> 00:06:47,250 Chris Bedingfield: They're destination centres. So, the good landlords understand that their 130 00:06:47,250 --> 00:06:50,450 Chris Bedingfield: malls are about entertainment as much as they are about shopping. 131 00:06:50,450 --> 00:06:53,700 Chris Bedingfield: So it's about food, it's about leisure, it's about restaurants, 132 00:06:53,700 --> 00:06:58,140 Chris Bedingfield: it's about cinemas, it's about going to the gym, booking your 133 00:06:58,140 --> 00:07:02,310 Chris Bedingfield: next holiday flight centre. And we think those shopping centres will 134 00:07:02,310 --> 00:07:05,159 Chris Bedingfield: do quite well. The shopping centres that are in the business 135 00:07:05,160 --> 00:07:08,550 Chris Bedingfield: of just selling stuff, they're the ones that are most 136 00:07:08,550 --> 00:07:12,350 Chris Bedingfield: at risk because you need to be very, very convenient 137 00:07:12,350 --> 00:07:15,400 Chris Bedingfield: in retail, just around the corner, servicing the local neighborhood. 138 00:07:16,120 --> 00:07:18,450 Chris Bedingfield: Or you have to be, as you say, you have 139 00:07:18,450 --> 00:07:21,190 Chris Bedingfield: to be a destination, a day out. If you're anything in between, 140 00:07:21,570 --> 00:07:22,680 Chris Bedingfield: that's where the risk lies. 141 00:07:23,090 --> 00:07:24,570 Sean Aylmer: Stay with me Chris, we'll be back in a minute. 142 00:07:29,770 --> 00:07:33,410 Sean Aylmer: My guest this morning is Chris Bedingfield, Principal and Portfolio 143 00:07:33,410 --> 00:07:38,430 Sean Aylmer: Manager of Quay Global Investors. Are there things that are going on in Europe 144 00:07:38,430 --> 00:07:40,970 Sean Aylmer: or the US potentially that we're likely to see in 145 00:07:40,970 --> 00:07:44,360 Sean Aylmer: Australian shopping centres over the next decade or so? What 146 00:07:44,360 --> 00:07:45,190 Sean Aylmer: can we expect? 147 00:07:45,420 --> 00:07:48,620 Chris Bedingfield: Well, actually, it's more the other way. Australians might be a little bit 148 00:07:48,640 --> 00:07:52,570 Chris Bedingfield: surprised to hear this, but in our view, Australia leads 149 00:07:52,570 --> 00:07:55,020 Chris Bedingfield: the world in shopping centre management and development. 150 00:07:55,540 --> 00:07:57,040 Sean Aylmer: Ah, Frank Lowy has a lot to answer for. 151 00:07:57,310 --> 00:08:06,060 Chris Bedingfield: Yeah. So in Australia, it's not unusual to go to a shopping centre, pre- pandemic, 152 00:08:06,060 --> 00:08:10,790 Chris Bedingfield: to see a movie, to go to a restaurant, to have those services. Fashion, 153 00:08:10,890 --> 00:08:13,530 Chris Bedingfield: as a percentage of shopping centres in Australia is half 154 00:08:13,530 --> 00:08:16,470 Chris Bedingfield: that compared to the US. So it's a lot more service orientated. 155 00:08:16,470 --> 00:08:20,970 Chris Bedingfield: So it's more going the other way, quite frankly. But 156 00:08:20,970 --> 00:08:24,250 Chris Bedingfield: I think the big trends overseas coming to Australia are 157 00:08:24,270 --> 00:08:27,130 Chris Bedingfield: more in other sectors. I think one of the really 158 00:08:27,140 --> 00:08:29,830 Chris Bedingfield: attractive things about global real estate is you have so 159 00:08:29,830 --> 00:08:32,750 Chris Bedingfield: much choice of different types of things you can invest in. 160 00:08:32,770 --> 00:08:36,880 Chris Bedingfield: We can invest in single family rental, apartment rental, senior housing, 161 00:08:37,230 --> 00:08:42,300 Chris Bedingfield: data centres, self storage, some people invest in communication towers. 162 00:08:42,770 --> 00:08:45,970 Chris Bedingfield: There's just a wide array of opportunity to invest globally. 163 00:08:46,020 --> 00:08:49,109 Chris Bedingfield: And I think the one trend that we're seeing overseas 164 00:08:49,110 --> 00:08:52,340 Chris Bedingfield: that could come to Australia hopefully is more and more 165 00:08:52,570 --> 00:08:56,240 Chris Bedingfield: investment choice. Student accommodation is another one that we've invested in. 166 00:08:56,900 --> 00:09:01,190 Chris Bedingfield: Just really interesting sectors that I think in Australia, hopefully 167 00:09:01,250 --> 00:09:04,110 Chris Bedingfield: we can start seeing more and more of those investment opportunities here. But in 168 00:09:04,110 --> 00:09:07,239 Chris Bedingfield: the meantime, we're just taking advantage of those sectors globally. 169 00:09:08,530 --> 00:09:13,070 Sean Aylmer: I mean, data centres, student accommodation, towers, which sometimes fall 170 00:09:13,200 --> 00:09:15,239 Sean Aylmer: a little bit close to infrastructure in my mind. I 171 00:09:15,240 --> 00:09:18,200 Sean Aylmer: suppose they're all real assets. There certainly seems to be 172 00:09:18,200 --> 00:09:22,610 Sean Aylmer: a push to look beyond just equities and bonds into 173 00:09:22,809 --> 00:09:25,230 Sean Aylmer: alternative assets. Now, depending on how you define that, but 174 00:09:25,230 --> 00:09:28,380 Sean Aylmer: I'm thinking about real assets. So, property infrastructure, as almost 175 00:09:28,380 --> 00:09:29,100 Sean Aylmer: as one grouping. 176 00:09:29,510 --> 00:09:34,200 Chris Bedingfield: Yeah, there is a fine line. We get asked this question all the time, where do you draw the line? And for real estate, for us, 177 00:09:34,630 --> 00:09:38,380 Chris Bedingfield: it's about alternate use. So you might own an office building. 178 00:09:38,500 --> 00:09:40,780 Chris Bedingfield: This happened early in the 1990s a lot. You might 179 00:09:40,920 --> 00:09:43,689 Chris Bedingfield: own an office building, office markets are terrible. You can 180 00:09:43,690 --> 00:09:47,370 Chris Bedingfield: convert it to residential. You might own a warehouse in inner 181 00:09:47,370 --> 00:09:50,660 Chris Bedingfield: city Sydney or inner city Melbourne, you can't find a 182 00:09:50,660 --> 00:09:53,660 Chris Bedingfield: tenant or suddenly the residential market's booming, you convert it 183 00:09:53,660 --> 00:09:57,059 Chris Bedingfield: to residential. So for us, real estate is the ability 184 00:09:57,059 --> 00:10:00,079 Chris Bedingfield: to convert to an alternate usage. It's your ultimate get 185 00:10:00,080 --> 00:10:02,059 Chris Bedingfield: out of jail free card. We're seeing it in the United 186 00:10:02,059 --> 00:10:05,050 Chris Bedingfield: States with shopping centres that are closing, they're being converted 187 00:10:05,050 --> 00:10:08,750 Chris Bedingfield: to distribution centres or self storage facilities or residential developments. 188 00:10:09,340 --> 00:10:12,540 Chris Bedingfield: And it's one of the reasons why real estate outperforms 189 00:10:12,540 --> 00:10:15,520 Chris Bedingfield: equities over the long term, which it does. It's got that 190 00:10:15,520 --> 00:10:18,579 Chris Bedingfield: get out of jail free card, that alternate use. If 191 00:10:18,580 --> 00:10:20,949 Chris Bedingfield: your current use is not working for you, you can turn 192 00:10:20,950 --> 00:10:23,800 Chris Bedingfield: it into something else. Now with infrastructure, that's not always 193 00:10:23,800 --> 00:10:27,200 Chris Bedingfield: the case. I mentioned cell towers before. Generally, those cell 194 00:10:27,200 --> 00:10:29,110 Chris Bedingfield: towers aren't sitting on land that you even own. It's 195 00:10:29,110 --> 00:10:31,520 Chris Bedingfield: usually leased. So you can't always turn that into something else. 196 00:10:31,520 --> 00:10:35,530 Chris Bedingfield: Same with roads. You might own a road. And if people 197 00:10:35,530 --> 00:10:37,480 Chris Bedingfield: decide not to drive down that road anymore, you can't 198 00:10:37,480 --> 00:10:40,059 Chris Bedingfield: exactly turn that into a house or kind of turn 199 00:10:40,059 --> 00:10:42,660 Chris Bedingfield: it into something else. So we spend a lot of 200 00:10:42,660 --> 00:10:45,439 Chris Bedingfield: time thinking about that distinction. And so for real estate, 201 00:10:45,440 --> 00:10:48,290 Chris Bedingfield: we think it's all about being able to convert what 202 00:10:48,290 --> 00:10:50,730 Chris Bedingfield: you have into something else if you need to. 203 00:10:51,309 --> 00:10:52,600 Sean Aylmer: Now we are running out of time, but I do 204 00:10:52,600 --> 00:10:55,010 Sean Aylmer: want to ask you a couple of things. Industrial. It 205 00:10:55,010 --> 00:10:57,219 Sean Aylmer: seems to me, if there's an e- commerce boom, and 206 00:10:57,270 --> 00:10:59,320 Sean Aylmer: someone the other day was saying to me, you almost 207 00:10:59,320 --> 00:11:02,449 Sean Aylmer: need three times the space in a warehouse as you 208 00:11:02,450 --> 00:11:06,490 Sean Aylmer: do in a shop, simply because of the supply chain 209 00:11:06,490 --> 00:11:08,480 Sean Aylmer: and the logistics of getting stuff around. I don't know 210 00:11:08,480 --> 00:11:11,470 Sean Aylmer: whether that's true or not, but it does seem the 211 00:11:11,470 --> 00:11:13,869 Sean Aylmer: outlook for industrial is pretty good. 212 00:11:14,500 --> 00:11:16,660 Chris Bedingfield: You've got to be really careful in real estate. It's 213 00:11:16,660 --> 00:11:19,660 Chris Bedingfield: not just about demand, it's about supply and the elasticity 214 00:11:20,050 --> 00:11:24,590 Chris Bedingfield: of supply. So you could go back to the 1970s, 1960s and say, 215 00:11:24,590 --> 00:11:26,400 Chris Bedingfield: air travel is going to boom. And you would have 216 00:11:26,400 --> 00:11:28,679 Chris Bedingfield: been right on the demand side, but owning an airline 217 00:11:28,679 --> 00:11:31,429 Chris Bedingfield: might not have been your path to riches. So you've got to think about 218 00:11:31,880 --> 00:11:34,500 Chris Bedingfield: what are the barriers to supply? And for industrial, it's 219 00:11:34,500 --> 00:11:37,500 Chris Bedingfield: very low. So the demand story is easy to understand, 220 00:11:38,080 --> 00:11:41,410 Chris Bedingfield: but the supply is coming. And the thing about industrial 221 00:11:41,550 --> 00:11:44,780 Chris Bedingfield: is around the world, people are paying crazy prices for 222 00:11:44,780 --> 00:11:47,710 Chris Bedingfield: industrial assets and the supply is going to come and be 223 00:11:47,710 --> 00:11:51,420 Chris Bedingfield: a real threat. So I just caution people to, when you're 224 00:11:51,420 --> 00:11:54,420 Chris Bedingfield: thinking about real estate, don't just think about the demand equation. 225 00:11:54,770 --> 00:11:57,870 Chris Bedingfield: Think about the elasticity of supply or how quickly supply 226 00:11:57,870 --> 00:12:00,890 Chris Bedingfield: can come. You own a house in Bellevue Hill, you'll 227 00:12:00,890 --> 00:12:02,990 Chris Bedingfield: probably do well over time. It's very hard to build 228 00:12:02,990 --> 00:12:06,030 Chris Bedingfield: more houses in Bellevue Hill. You're not building more land in 229 00:12:06,030 --> 00:12:08,510 Chris Bedingfield: places like that. So it's not just about demand. You've 230 00:12:08,510 --> 00:12:10,800 Chris Bedingfield: got to get both equations right. So we're a bit 231 00:12:11,059 --> 00:12:12,001 Chris Bedingfield: cautious on industrial offering. 232 00:12:13,150 --> 00:12:16,120 Sean Aylmer: And that explains then the residential real estate market in 233 00:12:16,120 --> 00:12:18,160 Sean Aylmer: Australia does it, the housing versus apartments? 234 00:12:18,500 --> 00:12:21,370 Chris Bedingfield: Yeah, that's exactly right. If you buy a house on 235 00:12:21,370 --> 00:12:23,870 Chris Bedingfield: a block of land, you tend to do better over time. 236 00:12:23,970 --> 00:12:27,730 Chris Bedingfield: Mainly because, it's the old saying, they're not building more 237 00:12:27,730 --> 00:12:30,820 Chris Bedingfield: land. Or in some places in Asia and the Middle East 238 00:12:30,820 --> 00:12:32,809 Chris Bedingfield: they are, but yeah, you tend to do a lot 239 00:12:32,809 --> 00:12:35,830 Chris Bedingfield: better. Whereas with apartments, the sky literally is the limit, 240 00:12:37,370 --> 00:12:40,679 Chris Bedingfield: and supply is much more easily responsive and your price 241 00:12:40,679 --> 00:12:42,300 Chris Bedingfield: performance generally, isn't quite as good. 242 00:12:43,860 --> 00:12:46,040 Sean Aylmer: I apologise to the listeners for the next Dorothy Dixer, 243 00:12:46,040 --> 00:12:48,150 Sean Aylmer: but I'm just interested. So if I want to invest 244 00:12:48,150 --> 00:12:49,730 Sean Aylmer: in some of these sorts of assets, I can go 245 00:12:49,730 --> 00:12:53,280 Sean Aylmer: to Quay Global Real Estate, to you guys, and you 246 00:12:53,280 --> 00:12:55,679 Sean Aylmer: have a range of options which you can choose from. 247 00:12:55,679 --> 00:12:58,229 Sean Aylmer: And I hasten to add that all listeners need a 248 00:12:58,230 --> 00:13:01,240 Sean Aylmer: financial plan and should use a financial advisor. I'm a great believer 249 00:13:01,240 --> 00:13:03,210 Sean Aylmer: in them. But that's how it works. So it's actually 250 00:13:03,210 --> 00:13:05,860 Sean Aylmer: buying into a managed fund, assuming you hit certain limits 251 00:13:05,860 --> 00:13:07,480 Sean Aylmer: and can invest enough money, et cetera. 252 00:13:10,300 --> 00:13:13,140 Chris Bedingfield: Yeah. I'm going to get into trouble saying this as well, but I'm not afraid of people going into an index fund either. 253 00:13:13,150 --> 00:13:15,329 Chris Bedingfield: I mean, we're an active fund. We are very different 254 00:13:15,330 --> 00:13:18,270 Chris Bedingfield: to the index and we've done better than the index 255 00:13:18,270 --> 00:13:21,320 Chris Bedingfield: over time. Significantly better, I should say. But having said that, 256 00:13:21,690 --> 00:13:24,809 Chris Bedingfield: sometimes the easier option is to go into a low-cost index fund 257 00:13:24,809 --> 00:13:27,070 Chris Bedingfield: as well and you get those opportunities. I think it 258 00:13:27,070 --> 00:13:29,600 Chris Bedingfield: does make sense if you're thinking about real estate to 259 00:13:29,600 --> 00:13:32,700 Chris Bedingfield: think more global than local, because the opportunities are just 260 00:13:32,960 --> 00:13:36,790 Chris Bedingfield: so much more significant and the diversification benefits are greater 261 00:13:36,790 --> 00:13:38,000 Chris Bedingfield: because of the wide opportunities there. 262 00:13:39,140 --> 00:13:40,530 Sean Aylmer: Chris, thank you for talking to Fear and Greed. 263 00:13:41,070 --> 00:13:42,700 Chris Bedingfield: It's been my pleasure. Thanks for having me. 264 00:13:43,000 --> 00:13:46,939 Sean Aylmer: That was Chris Bedingfield, Principal and Portfolio Manager of Quay 265 00:13:46,940 --> 00:13:50,089 Sean Aylmer: Global Investors. This is a Fear and Greed Daily Interview. 266 00:13:50,090 --> 00:13:52,670 Sean Aylmer: Join me every morning for the full Fear and Greed podcast, 267 00:13:52,670 --> 00:13:54,979 Sean Aylmer: with all the business news you need to know. I'm 268 00:13:54,980 --> 00:13:56,500 Sean Aylmer: Sean Aylmer, enjoy your day.