Published 18 July, 2023
While most investors gain exposure to residential property through direct ownership of one or more investment properties, an emerging asset class is worth being aware of – residential real estate funds.
In recent years, a number of managers of unlisted residential real estate funds have popped up across the market. These funds are replicating the equitisation process which has long happened in the commercial property sector.
What is equitisation?
Equitisation is when a fund invests in a portfolio of properties and the non-debt ownership is split between the fund’s equity investors. It’s a way of making a property portfolio investible for many unrelated investors and has enabled the significant listed and unlisted fund inflows the commercial property sector has attracted in recent decades. So it’s a potential game-changer for the residential real estate investment world.
These residential property funds such as Resifund, DomaCom, and BrickX have good reason to be optimistic about their futures. For an asset class that has historically required a significant amount of management effort per dollar invested in dealing with setting up loans and managing tenants, the concept of large-scale passive residential real estate vehicles could open up the asset class to a much wider group of investors.
Are residential real estate funds worth considering?
Landen’s Head of Funds Management, Jeff Li shares his perspective: “We’re seeing more residential property funds emerging across the market, and we expect more to come as the asset class becomes more mainstream. We view this as good news for investors interested in gaining exposure to residential real estate without doing all the leg work themselves. With this in mind, we are looking forward to the opportunities Landen’s new funds will bring for investors.”
Landen’s Grantham Farm Fund is now open, offering investors the opportunity to invest in property related investment funds. Click here to learn more about this opportunity.
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