Interview: Property investing, but not as you know it

Published Jun 22, 2025, 5:30 PM

What started out as a conversation about the different opportunities in commercial property quickly moved beyond the traditional definition of commercial, office and industrial. Chris Bedingfield, co-portfolio manager at Quay Global Investors, takes Sean Aylmer through where he sees the opportunities in global property, from data centres to student housing.

This is general information only. You should seek professional advice before making investment decisions.

Welcome to the Fear and Greed Business Interview. I'm Sean ailmart. Today it's all about commercial property, from office towers and retail properties through to industrial warehouses, student accommodation, data centers. There's plenty going on in the commercial market. It's arguably more exposed to international forces than the residential market, arguably, which leads me to today's guest. Chris betting Field is the co port following and manager of Key Global Investors, investing in real estate securities around the world. As always, this is general information only. You should aways seek professional advice before making investment decisions. Chris joins me in the studio. Welcome back to Fear and Greed.

Chris, thanks for having me, Sean. Great to be here again.

So we'll come to the normal commercial types, industrial and office and retail. Before we get there, though we hear lots about data centers, we're increasingly hearing stuff about student accommodation. What are some of the lesser known opportunities in investing? Maybe not less than known to you, Chris, but to people like me a little bit outside the square. So can we start with data centers because we hear so much about it what's the outlook in Australia like then globally?

Yeah, I mean, you know, real estate commercial estate is very, very broad and it includes those other sectors as you mentioned, and data centers right now is having its day in the sun. If we went back three or four years ago, it was logistics and industrial when Amazon was going to take over the world, and shopping centers we're going to be known more. And now it's the data centers and the driver there. There's two big secular drivers. Everyone talks about artificial intelligence and the need for data center capacity there and that's true, but there is also an underlying need for data centers for everyday businesses and commercial use and just general sort of business needs. And so those huge tailwinds are coming through at the same time that there is a lack of supply. And what you result of that is you're getting a nice squeeze between the landlord and the tenant. And as a landlord, that's what you want. And we're seeing some pretty strong rent growth pretty much everywhere. I think, you know, when it comes to data centers, though, like most forms of real estate, it's easy to say, you know, we should be in data centers, but it's a location thing as well. And what we're hearing more and more from, particularly from the big data center uses, you know, the big Amazons of the world and the Microsoft's the world, or Microsoft in particular, is they're choosing their partners pretty carefully and they're choosing their locations pretty carefully as well. So it's a strong sector right now. But you know, like always in real estate, location and care does need to be taking into account.

I was talking to someone about data centers the other day and they said, the two reasons why some of the local listed guys haven't done so well recently one valuation and particularly last year when they raise the money. But the second one was deep seek. Now, is that actually an issue that AI being part of the reason that we need data centers. Is there a possibility that you know, cheaper options come out less need for energy for data centers.

Is that a risk? You know, I would be lying if I said, you know, we know exactly what's going on across the other across the other side of the world. But it raises a good point, and that is that you know, in real estate in particular, there's always the risk of obsolescence and as exciting and as interesting and you know, as good as story data centers is. It's a highly technical space and you know, and I think along with that comes a little bit of caution. You can compare that to something as boring as residential. I don't think that, you know, ten fifteen years from now, we're not going to need a house or a home or apartment. But yeah, the question is, you know, for something like data storage, is you know what are those risks? Those sort of left field risks And you have to be mindful of that. And I think anyone, you know, they're geniuses if they know where it's not going to be in three or four years time. What we are doing as an industry as we're watching the big hyperscalers very closely, reading their transcripts very closely. Are they still investing, Where are they investing? When do they pivot? Because that'll be the tell.

What about residential broadly, but let's go specific on student accommodation, what's happening in that sect? Again? We hear a lot more about that.

Yeah, it's a it's a favored asset class for private equity. If you go back three or four years ago, there was you know, probably six or seven studentcommodation companies listed around the world. There's now two and soon to be one, so they've all been taken private. There's one left, one main size that's left and that's a company in this is in the listed space. It's a company called Unite. It's the largest student accommodation provider in the UK. And one of the big stories there is there's there's two big themes. One's been there for a while. One is that people need, you know, there's a greater percentage of students finishing high school going to university. The UK has some of the best well known universities globally, and now with a second big theme that's emerged is given the hostility I guess lack of a better term of what's happening in the United States to some of the universities there and particularly to foreign students, there is going to be we expect to demand surch a real demand surge back into the UK. So a pretty good story there. And yeah, it's one of those asset classes that does extremely well in recessions because in fact demand incrementally goes up because people defer going to back to work and they continue their studies and the like. So, yeah, it's an interesting little asset class.

Yeah, stay with me, Chris, we'll be back in a minute. My guest this morning is Chris Beddingfield, co port folio manager of Key Global Investors. Chris, before the break, we were talking about student accommodation. What about residential more general?

Yeah, So, I mean residential is extremely broad. I mean you can put it into a couple of buckets. There's what's called standalone housing, which you can buy on listed exchanges around the world. So think of your house with pick at white picket fence out the front and yard. Then you've got apartments, so think of anything from a two story, three story garden style apartment in suburban Atlanta up to high rise towers in New York. So you've got that. Then you've got manufactured housing or what we would call land lease. And then a sector that doesn't get that much airplay but is really exciting is senior housing and senior housing caters for anyone you have really anywhere between the seventies and the mid eighties. Senior housing with assistance with assistance is very exciting right now because at the end of the World War Two finished about eighty years ago. So the first of the baby Burmas is now turning eighty and that's a great demographic. I quite often say a lot of our investors who want to hear about data centers, it's like you're missing a big, really really good story here, because senior housing has as good a demand story as data centers. But the big difference is that in data centers, everyone's trying to build to meet supply or meet the demand. But in senior housing, starts are at fifteen sixteen year lows and no one's really building, and so there's a huge squeeze going on. And some senior housing listed senior housing real estate companies are up one hundred percent in the last twelve eighteen months, massively outperforming data centers. And so you know, it's you can find these stories in global real estate more than you can in the domestic market because we don't have it here. But oh so, I mean there's a couple of really big companies in the US Canada. I would caution people to look. I wouldn't look at Europe just yet. Europe didn't quite have the same baby boom straight after the war as the United States or Australia or Canada for obvious reasons, there was a big rebuilding that needed to do so. European demographic story is probably seven to eight years behind the US. But the US is happening right now, and the reason that no one's building them right now is the maths just doesn't work. The cost of build has gone up forty fifty percent the last few years, and you know, interest rates have gone up, and so developers are saying, well, unless I can get rents thirty forty percent higher than they are now, we're just not going to build. And the demand story is great and the total returns have been very solid and probably likely to continue. So when you talk residential, it's very broad and there are some really interesting pockets in there.

Okay, So moving on from residential, you mentioned retail, and the death of retail was supposed to happen at some point about now. It certainly hasn't. No, what's happening there.

No, it's a bit of a phoenix rising from the ashes, isn't it. It's interesting, isn't it. I think you know what's happened. We had this thesis well before COVID, and no one agreed with us, and at least of all the retailers BRD to COVID. The retailers thought, you know what, we probably don't need as many stores and we'll just go online and life will be great. And that strategy looked really, really clever, particularly during COVID, and then coming out of COVID, it seemed like everyone just got a little bit sick of staying at home and buying online and we all wanted to go back into shopping centers again. And what also retailers discovered was that if you're going to be one on one online, you're basically taking on the pure online guys, you know, the really big guys like Amazon, and they're going to beat you on price, they're going to beach on distribution, they're going to beach on service, and they'll probably throw in a streaming service for free on top of everything else, right as well. So if you're a retailer, you go, Okay, well I need to be online, but how do I differentiate myself? And the way to differentiate yourself is you need to be in shopping centers. But what's changed is, you know, if you go back twenty years, you needed to be in every major shopping center and probably every medium sized shopping center across the country. You get one hundred and fifty stores rolled out across the country. What's changing is that retailers are now saying, you know, I just need to be in the top thirty shopping centers in the country, but my stores will be bigger, and there'll be a point of contact for my customers who want to bring things back from online. I can showcase my new products, and I can have less staff, but more skilled staff in the stores and helping. And if you think about that, that's kind of like what Apple's been doing for the last twenty years with the Apple Store. I mean, here's the quintessential tech company showing retailers how to do physical retail and they've been doing it right for ages. And it's interesting that that's starting to happen now and retailers who sort of jettison their stores are scrambling to get their stores back. And if you look at Australia and around the world, occupancies and shopping centers are back to well above where they were pre COVID, and there's no space and they're not building any more space, and so it's becoming quite difficult for retailers to get their space, and that gives landlords an enormous advantage, and not just a pricing advantage. It gives them a mixed advantage. And what do I mean by that. It means that retailers who are really interesting, really exciting that can draw more people through that they'll prioritize them over and above just trying to get anyone to fill the space. And so the shopping centers are becoming more they're driving traffic better, and that traffic, of course drives the sales, and so that whole cycles working. So retail's good. I would caution that, going back to my point that I made before, retailers want to be in the top twenty twenty five to thirty stores, you really want to be careful about those mid market shopping centers, those shopping centers that are not, you know, the big sort of dominant ones. So those are the guys that I think might be a little bit more at risk.

Chris, thank you for talking to Fear and Greed. Thanks for having me as Chris Weddingfield, co portfolio manager of Key Global Investors. This is the Fear and Greed Business Interview. Remember this is general information only, and you should seek professional advice before making investment decisions. Join us every morning for the full episode of Fear and Greed business news you can use. I'm choinielma Enjoy your day.

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