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Designed for wholesale investors and invested through LongView’s home equity release platform, the new fund provides exposure to established residential property without requiring investors to purchase individual property outright, sidestepping many of the issues made by the budget.
The launch follows LongView’s $50 million Home Equity Fund 1, which the investment firm said was oversubscribed and has delivered annual returns of 14.6 per cent since its beginning.
LongView said Fund 2 would continue to co-invest in what it called “RODWELLs” – robust, older dwellings on well-located land – through its home equity release platform. The existing fund’s portfolio comprises 200 properties across Australia’s east coast.
Executive chairman and co-founder James Hooke said the company believed the current market environment presented an opportunity for investors seeking residential property exposure.
“Although there will undoubtedly be instability, we view this as a tailwind for our investors and new Fund,” Hooke said.
“We are confident that traditional older family homes on good blocks of land will remain a resilient investment with strong capital growth potential in the medium term.”
Hooke said recent changes to negative gearing and capital gains tax, alongside broader cost-of-living pressures, had altered market conditions, with home owners becoming more willing to access equity in their properties and investors looking at alternative ways to participate in the residential property market.
LongView also pointed to the federal budget’s forecasts for continued population growth as supporting the long-term outlook for established housing.
Co-founder Evan Thornley added that the company believed the underlying drivers of residential property remained intact despite recent policy changes.
“Despite all the tension surrounding the impacts of the latest Federal Budget, these underlying drivers – population growth and well-located land – support continued value appreciation, particularly in the RODWELLs we invest in,” Thornley said.
To support the expansion of Fund 2, LongView has partnered with Warakirri Asset Management, which will distribute the fund across the wholesale investment market, particularly through family offices and advisers to high-net-worth investors.
Warakirri managing director Jim McKay said the partnership would broaden the range of residential property investment opportunities available to the firm’s clients.
[Related: Variable mortgage momentum continues as lenders reprice]
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