Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 104

Don’t do what everyone else is doing

Commercial property may be generally underrated as an investment class but not by those enjoying the dependable double-digit returns it can deliver.

It may not have the sizzle of an off-the-plan apartment purchase or a stock market play but commercial property investment, when done right, consistently outperforms its over-hyped competitors.

I hear misconceptions everyday about commercial property investment. Some people are worried about putting all their eggs in one basket. I reply, “You are only diversified when some of your investments perform worse than others.” Others say they would prefer to fully own their investment, not be a part-owner. However, with residential units, for example, you must comply with body corporate, you only own the air inside the walls, you do not own your entry door as it is common property, and you do not own your car park as it operates under a license. And on it goes.

A lot of people also say to me that they do not know enough about commercial property to invest in it. But many of these same people have never run an international mining company, a telecommunications company or a bank, but they still buy shares in BHP, Telstra and Westpac. So there are a lot of inconsistencies in the arguments against commercial property investment, and they also ignore the strong underlying fundamentals of this asset class.

Opportunities in commercial property

After more than 20 years of experience in the commercial property industry, I wanted to create something that I could invest my own family’s money in, a different model based on what I had learnt on property fundamentals, not financial engineering. My company, Sentinel, is an unlisted commercial property fund manager with a focus on opportunistic buying of non-core commercial property assets. Essentially, we buy what others do not want or do not see the inherent value in, and then work to maximise returns through hands-on management and value-adding. As they say in residential speak, buying ‘the worst house in the best street’.

These unlisted property funds pool investors’ money to buy large commercial property assets such as shopping centres, bulky goods and homemaker centres and industrial facilities. Distributions are paid monthly to investors from rental income, with the majority of tenants in the ASX200, and supplemented by special capital return payments on revaluations and capital growth returns on divestment. As a sign of the diversity of opportunities, we currently have 30 properties in our funds.

One of the key philosophies which I believe underpins successful commercial property investment is buying when others are not, because “if you do what everybody else does, you end up where everybody else is”. Good timing of investments is critical. Money is made by being a ‘first mover’ out in front of the pack and getting the fresh grass, rather than following the herd and getting the leftovers. 

Mistakes in timing investments

The graph below is an amusing, but also accurate, insight into how people’s minds work when it comes to investing and specifically the timing of investment.

Commercial property

Commercial property


The common mentality is that everyone likes to speak to someone else (a workmate, a relative or a neighbour) about investing to be sure that they are doing what everyone else is doing at the same time they are doing it. "Uncle Bob always gives quality advice at the Sunday BBQ!"

There is comfort in the herd but it doesn’t mean it is right. In fact, the opposite is usually true. As Warren Buffett says: “Be fearful when others are greedy and greedy when others are fearful.”

The dynamics of Australia’s commercial property market are rapidly changing, with a large weight of money chasing limited opportunities and driving down yields. The buying window of opportunity is fast closing, and the right assets are becoming increasingly difficult to secure at the right prices.

Hands-on active management of existing assets is essential to continually add value, maximise performance and, in turn, deliver consistent returns to investors. There is also the potential for strategic expansion into new styles of investment and alternate asset classes that still fall under the broad category of commercial property.

While buying at the right time is important, it is equally important to sell at the right time and at the right price. This can only be achieved by relentlessly reviewing assets and identifying and capitalising on opportunities to test market value and get the best possible results for investors.


Warren Ebert is the Managing Director of commercial property investment firm Sentinel Property Group which has funds under management approaching $700 million. This article is general information and does not consider the individual needs of any investor, and does not constitute formal advice. Like all forms of property, commercial property has risks relating to the quality of the asset and leverage in the structure.


Leave a Comment:


Most viewed in recent weeks

Three steps to planning your spending in retirement

What happens when a superannuation expert sets up his own retirement portfolio using decades of knowledge? He finds he can afford much more investment risk in his portfolio than conventional thinking suggests.

Five stock recoveries not hanging on COVID predictions

The focus on predicting the recovery from the pandemic is the wrong emphasis. Better to identify great companies benefitting from market changes over a three- to five-year horizon with or without COVID.

Peak to peak, which LIC managers performed during COVID?

A comprehensive review of dozens of LICs shows how they performed in the crucial 'peak to peak' of COVID. This 14 months tested the mettle and strategies of a sector often under fire, with many strong results.

Finding sustainable dividend stocks on the ASX

There is a small universe of companies on the ASX which are reliable dividend payers over five years, are fairly valued and are classified as ‘negligible’ or ‘low’ on both ESG risk and carbon risk.

Blink and you missed a seismic shift in these stocks

Blink and it happened. If announcements in this sector were made by a producer of iron ore, gas, copper or some new tech, the news would have been splashed across the front pages. Have we witnessed a major change?

How inflation impacts different types of investments

A comprehensive study of the impact of inflation on returns from different assets over the past 120 years. The high returns in recent years are due to low inflation and falling rates but this ‘sweet spot’ is ending.

Latest Updates


Platinum’s four guiding investment principles

Buying mispriced stocks is often uncomfortable when companies are outside the spotlight and markets are driven by emotions. And it's inescapable that the price paid ultimately determines the end result.


Andrew Lockhart on corporate loans as an income alternative

Loans to corporates were the traditional domain of banks, but as investors look for income alternatives to term deposits, funds have combined hundreds of loans into a single structure to create a diversified investment.


10 things I learned in my faux-retirement

Pre-retirees should ‘trial run’ their retirements. All those things you want to do - play golf, time with the family, a hobby, write a book - might not be so appealing in reality, but you might discover other benefits.


Achieving a sufficient retirement income portfolio

Retirees require a reliable income stream to replace the wages they received when they were working and should focus on the dollar income generated over time rather than the headline yield percentage.

'Wealth of Experience' podcast and ASA webinar on ETFs v LICs

Peter reveals some top stock picks with an emphasis on long-term assets like Sydney Airport, Graham discusses spending in retirement and valuing assets, the key to Amazon, guest Andrew Lockhart and plenty more.


Lucy Turnbull’s three lessons on leadership and successful careers

From promoting women to boost culture to taking opportunities as they arise, Lucy Turnbull AO says markets should not drive decision-making and leaders must live and breathe the company's mission and values.


Are concerns about inflation inflated?

While REITs and some value stocks are considered 'inflation-sensitive' assets, the data provide little support that they are good inflation hedges, and energy stocks and commodities are too volatile. So what works?



© 2021 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.