For a long time, syndicates were a popular means for investors to invest in direct property, but the introduction of unlisted property funds left syndicates on the sidelines.
However, unlisted property funds have recently struggled with a lack of liquidity, which could help the demand for syndicates. "Syndicates provide a commonsense solution to one of the biggest issues facing open-ended unlisted property funds," S&P fund analyst Kelly Napier said.
"The term-based structure recognises two critical aspects of direct property investment which are often overlooked; direct property is inherently illiquid and an investment should be for the medium to long term," Napier said.
Critical to the success of syndicates would be their ability to raise capital in an environment where leverage was both difficult to obtain and expensive, she said.
There is also a challenge to overcome negative sentiment towards unlisted property in general and to find investors willing to tie up their capital for five to seven years, perhaps even longer.
