121: JANA's Mary Power – Offices Market Woes, Liquidity and Blended Approaches to Property

In this episode of the [i3] podcast, I'm speaking with Mary Power, who is the Head of Property Research at asset consultant Jana. We cover the struggles of the property market in the early 90s, when Mary started out in the industry, and the learnings from that time. We take a look at how investors have dealt with 13 consecutive rate rises, starting in 2022 and we cover portfolio construction issues, including blending listed and unlisted property assets, the convergence of real estate and infrastructure, while Mary also predicts that up to 50% of Australian property money might be reallocated to international assets as super funds grow bigger.

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Overview of podcast with Mary Power, JANA

03:00 Getting into the industry
04:30 The early 1990s was a dramatic period in the office market and as a young person in the industry that experience was fascinating
07:00 I think we have turned a corner in terms of unlisted property
8:00 In June 2022, we headed into 13 interest rate rises, which was a significant head wind for the property sector.
10:00 The REIT sector is very sensitive to interest rates
11:00 Are REITs equities or properties?
12:30 Property people don't price off the cash rate; they price off the 10-year bond rate
14:00 The Melbourne property market is still a little bit difficult
16:00 People aren't getting their forward projections of labour seating in offices right
19:00 I think it is very hard to promise quarterly, ongoing liquidity in a portfolio with large assets
25:00 There is a big push for the build-to-rent sector to mature in Australia
31:00 Super funds could move up to 50 per cent of Australian property money offshore

Full Transcript of Episode 121

Wouter Klijn 02:01

Mary, welcome to the podcast.

Mary Power 02:04

Thank you very much, pleasure to be here.

Wouter Klijn 02:07

So you've been with Jana for more than 15 years. What got you into property investing or property research in the first place?

Mary Power 02:16

Oh, I might have to let you in on a little secret. I I've actually had two stints at Jana. I was actually at Jana in the between '94 and 2000 as well. So yes, I was how did I get into property? It's a great question. I had a friend whose father was a valuer, and I commenced the property valuations course at RMIT, and he got me a cadetship at Urbis, known as at Cox then, and I was hooked. I was enjoyed it immensely. And love the idea of the commerce and the built form coming together. Yeah. So I, I really enjoyed it. And I, I joined at a time when the property market was exuberant in the late 80s, and then it went into the early 90s, which was the recession we had to have. So I saw the best and the worst at the time. And I always say I learned all my skills over those eight or nine years.

Wouter Klijn 03:12

Yeah, and apart from the environment at a time, has the investment side changed much? I mean, do do the valuation practices change the deals, change the structures. What's that like?

Mary Power 03:26

It's a great question. In fact, a lot of it's changed, and a lot of the fundamentals remain the same. So lots of change, lots of so if you went into the early if you went into the early 90s and we had that recession, which absolutely impacted the office sector. In Melbourne alone, there were six office buildings that were built, and they would have been built on, not with pre commitments that you would have today, so built by developers who then had to entice tenants in. So a mill, we say, a million square feet, or square metres of Office became was built, and then the rest became vacant. So vacancy rose to ab