The veteran banker says the current property downturn is nothing like the GFC or the early 1990s recession. But three key lessons from those periods apply.
The Sydney Swans chairman, who was philosophically stoic following the side’s loss on Friday night, is like many property sector veterans – the scars of the GFC and the recession of the early 1990s, which also smashed Australia’s commercial property sector, are seared into his memory.First, Pridham says it’s important to recognise that downturns aren’t unusual. Since he entered investment markets on the eve of the 1987 crash, markets have been shaken by a crisis of some sort every three years.
“They’re excellent assets. They’ve delivered fantastic returns over a long period of time and the investors know that they’ve had a great ride.”This leads to Pridham’s third message, which he says has been reinforced recently by several local billionaires: from pain comes opportunity. Pridham says that’s a key focus for MA Financial across asset classes. In property, he can already see the light at the end of the tunnel. Due to soaring construction costs and rising interest rates, Pridham says the vast majority of property assets – including most homes auctioned on the weekend – are selling below replacement cost. That will eventually weigh on supply, which will eventually help markets find balance.
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