Demand for Alternative Assets on Rise

The demand for agricultural and self-storage real estate is surging off the back of Australia’s growing population.

In less than a week, Jason Huljich, joint chief executive of Centuria Capital Group, will explore the company’s strategic focus on agricultural assets at The Urban Developer’s Commercial Real Estate Summit.

With more than $600 million in agricultural real estate under management across Australia and New Zealand, Centuria is leading the charge in this burgeoning asset class.

Huljich will be joined on the panel In Focus: Alternatives: What is the Outlook for Alternative Asset Classes and Why? by Sam Kennard, chief executive of Kennards Self Storage, and Craig Scroggie, chief executive and managing director of NextDC, to discuss investment opportunities and growth strategies for each sector.

And as Centuria’s agricultural investments are rapidly growing, Sam Kennard will bring his extensive experience in the self-storage sector to the panel.

With less than a week to go, now’s the time to register for this full-day summit.

Centuria’s investment in agriculture

Huljich told The Urban Developer that in the past two years, “we have concentrated on protected cropping assets for our fast-growing Centuria Agriculture Fund (CAF), which is underpinned by five assets worth more than $440 million”.

Centuria assets include a 110ha of glasshouses and greenhouses. With 100 per cent occupancy and a 17-year weighted average lease expiry (WALE), these properties are central to Centuria’s agricultural strategy.

 “Glasshouse produce is 10 times more productive than broadacre farming and requires five times less water,” Huljich said.

“An average kilogram of tomatoes grown in the field requires 116 litres of water, but in a glasshouse, the same kilogram needs just 22.”

Protected from adverse weather conditions including frost, hail, and drought, these assets provide reliable year-round production, making them attractive to major fresh produce retailers such as Coles, Woolworths, and Aldi.

Sustainability and innovation in agriculture

Technological innovation was at the heart of Centuria’s agricultural investments, Huljich said, with its flagship 20ha glasshouse at Port Augusta, South Australia, which features cutting-edge sustainability measures, a highlight. 

“This asset includes a 1.4ML reverse osmosis plant, a 1ML desalination plant processing up to 600ML of seawater annually, and a 12.5ha concentrated solar energy system (CSP),” he said.

The CSP provides renewable energy, heating and irrigation, creating an efficient and sustainable environment for agricultural production.

“It generates 30,000MW of heating and 45,700KW hours of electricity while facilitating seawater desalination,” Huljich said.

Centuria’s broader real estate platform is also heavily invested in sustainability. “More than 20 per cent of Centuria’s $20.2-billion portfolio is made up of alternative assets ($4.1billlion), with agriculture, healthcare and real estate credit leading the way.”

Kennards and the growth of self-storage

With more than 30 years in the industry, Sam Kennard has seen it evolve from a basic industrial service into a sophisticated asset class driven by consumer demand.

“The self-storage industry in Australia is very sophisticated, having begun soon after its inception in the US,” Kennard said. 

“Initially, self-storage centres were simple, low-cost and crude industrial projects, today, they are clean, bright, retail projects.”

Kennard said that the sector had shifted from being dominated by ‘mum and dad’ operators to a major target for institutional investors. “This has led to industry consolidation and greater concentration of ownership,” he said.

The role of technology and future growth

Kennard highlighted the increasing use of technology in security and management processes in self-storage. However, he remained cautious about newer innovations such as keyless door latches. “In our view, they have doubtful customer and economic value,” he said.

Meanwhile, Huljich sees significant opportunities for growth in agriculture and healthcare in the future. Centuria’s acquisition of a 50 per cent stake in data centre provider ResetData is part of a forward-thinking strategy.

“ResetData’s Liquid Immersion Cooling technology reduces cooling capex by 95 per cent, increases hardware lifespan by 30 per cent, and enables a smaller footprint for data centres,” Huljich said.

Investment advice and sector challenges

Despite the growth potential in both sectors, there are challenges ahead. Kennard warned of “hot money” flowing into self-storage that could lead to surplus capacity in some markets. 

Huljich underscored the importance of a long-term perspective, particularly in agriculture, and highlighted the benefits of Centuria’s long-term tenant leases, which range 10 to 20 years, and the use of net and triple-net lease structures that place the responsibility for maintenance on tenants.

Join the conversation: Commercial Real Estate Summit

Time is running out—there’s only one week left until you can hear more from Jason Huljich, Sam Kennard, and Craig Scroggie. Don’t miss In Focus: Alternatives—What is the Outlook for Alternative Asset Classes and Why? at The Urban Developer’s Commercial Real Estate Summit.

Date: Wednesday, October 16
Location: Doltone House, Hyde Park, Sydney
Tickets: From $295 + GST
Duration: One-day summit
Featuring: 20-plus experts across office, retail, industrial, and alternative real estate sectors

For more information, visit our event website.