Please note this interview was filmed on Tuesday 24 March 2026.
In terms of value proposition, there’s few investments offering something as straightforward as diversified property funds, says Mark Lumby, co-head of Centuria Capital’s unlisted property fund platform.
“Unlisted property funds provide access to high-quality commercial property without the complexity of owning properties directly.”
Despite a challenging macro environment, property investing remains a compelling opportunity, but comes with its own set of obstacles around liquidity, cost and concentration.
But these are all things that can be offset via property funds, which can offer investors many of the benefits of property investing while mitigating the issues facing individual property investors.
The major benefits
Lumby identifies two major advantages to accessing property through a diversified fund: resilient income and liquidity.
“We’ve got a variety of different tenants and a variety of different properties providing income for investors,” he says. “By having a diversified component that reduces a risk profile for investors, we’re able to smooth returns and provide a more stable and consistent profile of returns for investors, both from an income perspective, but also from a capital perspective as well.”
It’s a strategy that also offers much greater liquidity than direct property investment, and less concentration risk, says Lumby.
“We’re able to sell one or two properties to curate the portfolio and provide a liquidity mechanism for investors by freeing up some cash,” says Lumby. “It doesn’t impact the integrity of the remaining portfolio because there’s no concentration risk and we’ve got that diversity of property, which is for the benefit of all investors.”
The advantages of unlisted property funds
Whilst listed property funds have become increasingly popular with investors, unlisted funds can potentially offer investors further benefits due to the stability around unit prices and capital, says Lumby.
“They provide a very capital-stable base because, unlike their listed counterparts, they’re not marked-to-market on the ASX every day.”
The Centuria Chadstone Homemaker Centre Fund is one such example: a newly-offered fund designed to provide an income distribution yield target of 7% p.a. and which includes Bunnings and JB Hi-Fi as tenants.
Another is the Centuria Diversified Property Fund. It’s an open-ended fund offering daily access and monthly income and made up of ASX-listed and national brand tenants.
According to Lumby, it “provides a really good, resilient rental income stream for investors, and we also provide investors with the ability to exit the fund on a quarterly basis or alternatively on a full liquidity event every five years, should they wish to do so.”
While targeting reliable rental income can help drive reliable income returns in the fund, many property funds will also have some interest rate sensitivity as a result of gearing, and that’s another consideration for investors.
Fund managers look to manage this risk with hedging strategies, but it’s important for investors to understand the strategies a manager employs to manage this risk.
Centuria takes a top-down, bottom-up approach to its portfolios. Top-down in terms of portfolio allocation and identifying the property sectors that are likely to over-perform, and then bottom-up in terms of the specific assets it invests in.
“We look at fundamental property requirements such as the tenant profile, the covenant strength of that income, the weighted average lease exposure profile, and more importantly, the location of a property,” he says.
“When it comes time to exit the property in 5 or 10 years time, or for a liquidity event, we’ve got to make sure that we’ve got the ability to sell that property into a recognised market, and that institutional or other investors would acquire the property at a premium to what we paid for it.”
The trends driving the market
Inflation and interest rates are front and centre of most discussions around property, and Centuria have dedicated teams tasked with managing those macro risks.
“The combination of having top-line rental growth at 3-4% or inflation, as well as fixing our interest rates, means that we’re able to predict, with a higher degree of certainty, the income profile for investors,” says Lumby.
“We’re able to then concentrate on the real good stuff, which is the property and make sure we derive great returns for investors.”
But Lumby says there’s really one core factor underpinning the sector.
“When looking at property as a thematic, it’s really driven by population growth.”
At current immigration levels, Australia’s population is increasing at a rate of 1 million every 2-2.5 years, and that drives the demand across most of the property market spectrum.
“For every 1 million new people coming into Australia, we need 800,000sqm of new retail space,” says Lumby. “What that means is we need 100 new shopping centres with a Coles or a Woollies with 15 specialties around that throughout Australia.
“We need two and a half million square metres of office space throughout Australia. For context, that’s 40 new 40-level skyscrapers every two years.”
Given the current state of play in the building industry, that means predictable supply requirements.
“Construction prices in Australia for residential, as well as office and retail, have been exponentially high and it’s really not feasible to build too many of those because tenants just aren’t paying the high rents.”
Ultimately, simple supply and demand dynamics drive the opportunities in property, and unlisted funds are well-placed to benefit.
“What we’re finding is existing tenants are scrambling for the existing space, which is driving up rents. And over the next few years, I think we’ll see a profile of high rental growth across Australian property, which will obviously benefit investors in unlisted property funds.”
Learn More
Investors can learn more about the Centuria Diversified Property Fund here.
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