The performance of indirect and direct property in New Zealand : A comparative analysis, 1993-1999 : A dissertation submitted in partial fulfilment of the requirements for the degree of Master of Property Studies at Lincoln University

Abstract

The essence of this paper is whether the unlisted, indirect property investment product known as the property syndicate in New Zealand exhibits performance characteristics which are more closely aligned with that of direct property or does it behave more akin to the listed property vehicle. The investment performance of direct and indirect property in the New Zealand market is compared over the six year period 1993 to 1999. Direct investment performance is benchmarked to the widely accepted Property Council of New Zealand Total and Capital Return Indices and the Listed Investment to the Ord Minnett Gross and Capital Return Indices. The unlisted property syndication market is benchmarked using a similar index construct to that of the Property Council of New Zealand. The data was then analysed to determine whether the unlisted direct property investment type exhibited any close correlation with either the indirect listed vehicle or the direct investment type. Results show that the unlisted direct property investment type, in this case the property syndicate, was more closely aligned to direct property in both total return terms, volatility of returns and portfolio diversification characteristics than to the listed sector. In addition to the performance characteristics of each of the investment types, a relatively detailed descriptive analysis of the property syndication market as it compares to the listed property market in New Zealand was undertaken.