The true measure of riskThe real problem long-term investors face is not short-term volatility. It is how to deal with the uncertainty surrounding the likely paths asset prices might take over their investment time horizon. This is not volatility. Instead, this is about understanding the range of possible macroeconomic outcomes, judging the likelihood of those outcomes occurring and choosing an asset allocation that best fulfils the investment objective within that context.Investors’ objectives can and should vary widely, based on their particular investment beliefs and characteristics. As such, their measures of risk should also vary widely and, ideally, be bespoke to the individual investor. In identifying their objectives, investors also need to establish the key outcomes they want to avoid and focus on creating the right measure for their risk appetite accordingly.However, more broadly, almost all investors share a balance-sheet problem, which is not confined to assets alone.Generally, investors such as pension funds and insurance companies, have a key balance-sheet metric, which is the discount rate applied to liabilities, or, in the case of endowments and sovereign wealth funds, an ‘inflation-plus’ return target. Both establish the rate of growth the assets need to achieve to keep the balance sheet whole or reach the required target.The true risk for all investors is the extent to which they are prepared to accept sub-optimal outcomes in their efforts to achieve their objective. A sub-optimal outcome is simply one that does not achieve the investment objective. Anything less than the target return is value destructive – anything greater is value creation.Measuring risk in terms of volatility does not help investors understand or effectively manage this problem. Instead, forecasting returns and economic scenarios are key.Investors should be focusing on their individual pension, insurance, endowment or sovereign wealth fund objectives, risk appetites and tolerances. The medium to long-term investment horizon available to most of these investors gives them an edge and should not be ignored because of investment managers and consultants’ short-term appeals to solve long-term problems.Most important, long-term investors should be focusing on forecasting returns, not volatility. They need to better understand the true economic exposure of portfolios and analyse the economic scenarios that are most likely and most worrying in the future.Stefan Dunatov is CIO at Coal Pension Trustees Investment and a member of the 300 Club The emergence of volatilityThe increasing focus on forecasting risk, and the emergence of volatility as a popular measure of that risk, is a disappointing response by the investment industry to the recent difficulties it has faced.Any investment manager would be excused for thinking the last 15 years have been difficult. Since the late 1990s, investors have faced an increase in apparent economic and investment uncertainty, especially in comparison to the preceding two decades.The rising uncertainty stems from several sources, including significant changes in investment and accounting regulations, not least the transition to marked-to-market pension liabilities under IFRS 13, which crystallises moves in asset prices more frequently on balance sheets. Other sources of uncertainty include the impact on liabilities of a prolonged period of falling interest rates and therefore discount rates, and, perhaps most critically, the single largest market panic since the 1930s.In investment terms, uncertainty translates into risk. Deep uncertainty, when we are faced with an unlimited set of possible outcomes, creates fear – the sort of fear seen during the Great Depression of the 1930s and again in 2008 when the banking system in the West teetered at the edge of an abyss. In dealing with that fear, investors analyse uncertainty by identifying potential outcomes, using historical events as guides, trying to judge the likelihood of different outcomes occurring and to envisage the circumstances leading to each outcome and their economic consequences. This process effectively reduces uncertainty to mere risk.In the current period of increased uncertainty, investors are naturally more focused on how to define, measure and manage that risk.In the search for answers, however, the industry as a whole has failed to develop an appropriate definition and measure of risk. Asset owners have allowed the providers of investment services, including investment managers and consultants, to dictate the approach asset owners should adopt. External advisers naturally prefer to work with an easily definable measure common to many clients. Their solution has been to replace the traditional focus on forecasting returns and all its difficulties with a short-term metric of volatility to forecast risk, which appears to be a more tractable measure. This touches on a separate key issue the industry also has to grapple with – a lack of alignment of interests between the asset owners, consultants and asset managers. Using volatility to measure risk is a big mistake for long-term investors, warns 300 Club member Stefan DunatovThe investment industry has two great failings: the inability to identify the right risks when considering investment objectives, and then measuring those risks the wrong way.A long-term investor’s appetite or tolerance for risk should be a direct function of its individual objectives and should not be measured by a short-term metric like volatility. Forecasting returns, not risk, should sit at the heart of long-term investors’ asset allocation strategy. Volatility doesn’t measure real riskVolatility is a crude, poor measure of risk for a long-term investor. Like the assumption that markets are efficient, the assumption that volatility is a good measure of risk is clearly wrong.Volatility forecasting is only helpful in the very short term. Volatility measures typically inform us about the state of the world at the current time, and models that forecast volatility tend to only be able to do so with any degree of accuracy over a very short time frame. Correlation assumptions form a key part of volatility forecasting, and these are even more difficult to predict – so much so that most market participants tend to not forecast them at all (correlations are most often static assumptions). The most confident analysts believe six months is a long-time horizon for forecasting volatility, which is of limited use to a professional investor with a medium to long-term investment horizon.By succumbing to the pressure of providers to focus on short-term measures of risk instead of long-term objectives, investors are giving up their ability to exploit the illiquidity premium. This undermines the premise of being a patient, long-term investor. Long-term investors should be able to absorb short-term fluctuations in risk premiums, yet risk models focus on these short-term fluctuations.
Germany’s Ministry for Labour and Social Affairs (BMAS) has taken many in the industry by surprise after taking up a proposal by the metal union to broaden the reach of occupational pensions.Just weeks after IG Metall first recommended the creation of industry-wide pension funds, similar to the Dutch model, the BMAS endorsed the proposal in a paper that has yet to be made public.IG Metall was the union behind MetallRente, one of the more recent industry-wide schemes launched in Germany.The banking industry also offers industry-wide provision through the €24bn BVV, while Soka Bau offers pensions and other benefits to those in the building industry. Additionally, countries including the Netherlands and Denmark provide collective schemes.PFZW, the Dutch healthcare sector fund, is among Europe’s largest schemes, with more than €150bn in assets.Denmark, meanwhile, has a handful of pension providers targeting the healthcare, white and blue-collar industry, providing them with a scale that would otherwise be almost impossible to achieve.Despite the German government’s support for IG Metall’s plan, the industry’s response has been lukewarm at best.Speaking at the German pension association’s (aba) annual conference in Cologne, Peter Hadasch, a board member at Nestlé Germany, rejected the idea outright.“We do not need yet another pensions vehicle,” he said.“Germany already has enough in the occupational pension segment.”According to the BMAS’s proposal, different industries would set up a Pensionskasse or a Pensionsfonds, into which each employer – either voluntarily or through compulsion – could make contributions on behalf of employees.Additionally, new protection funds, or ‘safety’ funds, should be created to ensure the security of assets in the new pension funds, even in case of insolvency.But Hadasch argued that this would mean employers could no longer use individual pension plans to attract prospective employees, or retain current ones. He also argued that the German way of “insuring all the risks in advance” was like “pulling all teeth to prevent tooth decay”.“We have to define the risks employers have to take in a funded pension system and not release them from this responsibility because this would sever the tie to the employee – and this would be the end of occupational pensions,” he said.Hadasch also warned that the new proposed system had been the brainchild of unions and the government – “two parties that fear nothing more than the capital markets”.“If you hedge away all risks,” he added, “it will be more expensive than taking a bit of risk.”Michael Hessling, a board member at Allianz, also criticised the BMAS’s proposal.He said he feared Germany’s “major pensions vehicle” – direct insurance contracts – would be left out in a new system, which he said would “increase complexity” and “damage the existing system”.“It would create uncertainty, and employers would stop setting up pension plans while waiting for the new system,” he said.But Peter Görgen, head of BMAS’s supplementary pension department, said it would be good to “plant new seeds” with the proposed vehicles.At the conference, aba chairman Heribert Karch read out a previous statement by the IG Metall union, which kicked off the debate in the first place but has now rejected the BMAS proposal.Karch noted that the union criticises the fact it would be mandatory to have a pension scheme that would fall under the IORP II regime, and that it does not want employers to be able to “buy themselves out” of their funding responsibilities.As for the aba itself, Karch said the association would not take any position on the matter, but merely “help think matters through”.Andrea Nahles, federal minister for Labour and Social Affairs, has previously said provisions within collective labour agreements should pave the way for greater occupational coverage – with a clause now included in the country’s new minimum wage law, a campaign promise of Nahles’s Social Democratic Party.A BMAS study on the expansion of occupational coverage earlier this year also attempted to highlight the main hurdles preventing small and medium-sized enterprises from offering provision.
An unnamed pension fund based in Europe is looking for a manager for a US equities mandate of $500m (€468m) or more, taking in all-cap stocks or large-cap stocks and using a multi-factor style and a passive process, according to a search on IPE Quest.Firms responding to the search should have at least $250bn in assets under management all in all, and at least $1bn under management in this asset class, according to the search.The pension fund is looking for a manager that has experience in replicating a multi-factor benchmark for US stocks but is also considering the same strategy for pan-euro, according to the search.Candidates could apply for the US mandate, for pan-Euro or both, it said. It stipulated that the manager must have experience with passive investing, alternative beta indices – multi-factor indices in particular – and be able to work with an exclusion list.The firm should also be open to customising an index, have large trading volumes to minimise transaction cots and be willing to offer a segregated mandate.The aim is to establish a long-term relationship with a manager that was a leading expert in alternative benchmark replication, it said.The deadline for responses to the search is 7 April, and the final selection will be made on 30 July, according to the search.Meanwhile, the pension fund of the Veterinary Surgeons’ Association of Austria is looking for an investment manager to take on a €10m-15m balanced mandate incorporating a performance floor allowing annual losses of no more than 5%.The association, advised by Zurich-based Kottmann Advisory and P&F Portfolio & Finanzmanagement in Vienna, has no preferred benchmark for the balanced portfolio, according to a search on IPE Quest.A segregated portfolio or an investment fund, or both, could be used to carry out the mandate.The advisers said they were looking for actual portfolio track records from firms responding to the search, and that they might ask finalists to present audited and auditor-signed performance and size data of funds where there was a maximum annual loss of no more than 8%.No composite or GIPS data will be allowed to be presented, they said.Portfolios tracking this floor concept should have a seven-year performance record, with only one year of negative performance, though candidates could present portfolio records with only five years of track record data, the advisers said.However, they said candidates providing all seven years of data may be preferred.The final closing date for responses is 30 March, according to the search.Final selection of investment managers by the board will take place on 28 May.The IPE.com news team is unable to answer any further questions about IPE Quest tender notices to protect the interests of clients conducting the search. To obtain information direct from IPE Quest, please contact Jayna Vishram on +44 (0) 20 7261 4630 or email email@example.com.
Strathclyde Pension Fund (SPF), the UK’s largest local government pension scheme, with £15.8bn (€22.1bn) in assets, made a 13.4% investment return for the year to 31 March.This compares with 13% for the benchmark and 8% for the previous year, and brings average annualised returns for the past five years to 8.6%.Within the equity allocation, the best performers were Japanese stocks, which returned 31%, and North American (23.7%) and Pacific ex Japan (18.6%) equities.The private equity portfolio made gains of 14.8%. The best-performing fixed income class was UK index-linked Gilts, which made 21.1%, compared with UK Gilts (13.9%) and UK corporate bonds (13.1%).Absolute return strategies within fixed income returned 3.3%, while the property portfolio made a return of 17.9%.At end-March 2015, equities made up 74.6% of the portfolio (compared with a strategic benchmark of 72.5%), while 12.2% was in bonds (underweight the 15% benchmark), 10.6% in property (compared with the 12.5% benchmark) and 2.5% in cash.The report on short to medium-term investment performance said: “Global equity markets have performed well relative to bond markets in recent years, so the fund’s equity bias has helped performance, and absolute performance over all periods has been strong. Property markets have also seen a period of recovery.”But it added: “Underperformance by some equity managers and the cost of turnaround and build-up of the fund’s property portfolio has detracted from returns over the five-year period.”SPF, administered by Glasgow City Council, is 94.3% funded, according to the latest triennial revaluation.The Council’s pensions committee is currently reviewing the fund’s investment strategy.Four alternative strategies are under consideration to improve downside risk, produce more efficiency and improve confidence in reaching the funding target.In the interim, SPF is working towards a target allocation of 5% for its new opportunities portfolio, which includes infrastructure, finance and alternatives.Four new commitments approved in June include two wind funds, and private debt and trade credit funds.
The Dutch Investment Institute (NLII) has called on its government to step up efforts to create profitable local-economy investment opportunities for institutional investors.In an open letter to lawmakers, Loek Sibbing, chief executive at the NLII, said there were far too few attractive projects in the Netherlands and called for a dedicated organisation to co-finance projects and make them “investment-ready”.He argued that, “even if €10bn of institutional assets were instantly available” to finance offshore wind farms, schools and thermal grids, “the money would remain unspent”.He singled out projects that were part of the transition to sustainable energy generation as being particularly well suited for institutional investors. “Management-consulting firm McKinsey recently concluded that, in the Netherlands, €200bn of investment is needed over the next 20 years,” Sibbing said.“Because pension-fund participants want their schemes to [embrace] sustainability, the funds are keen to invest in such things as energy-efficient housing, cleaner engines for inland shipping, wind farms and thermal grids.”Sibbing also advocated a “robust government organisation with the leeway to launch and guide well-designed projects in an entrepreneurial fashion”.He added: “A decisive body, with its own assets and skilled staff, would carry weight with local government and semi-public institutions and therefore be able to speed up projects.”He said the organisation should also have risk-bearing public funds available to make initially unprofitable investments and cover risks.He said that just such a concept – called P3 – was already operating successfully in Canada.Since last year, the NLII – an initiative launched by Dutch institutional investors – has established two funds for SME investments, as well as a fund for investments in care property.Its corporate-loans fund (BLF) has already raised €480m of its €500m target, with €180m invested and €140m in the pipeline.Investors have also committed €100m to the NLII’s subordinated-loans fund (ALF), which has a target of €300m.SPH, the €9.5bn occupational pension fund for general practitioners in the Netherlands, has committed €80m to NLII’s care property fund.Sibbing said €14m had now been invested in the Apollo Zorgvastgoedfonds, with €110m of concrete projects remaining.Elsewhere, Dutch labour party PvdA said in its election manifesto that it wanted pension funds to invest at least 20% of their assets locally, while the liberal democrat D66 said it wanted “a new public merchant bank that links existing government expertise and budget with assets that are available – from pension funds, for example”.
Initially, the pension fund of ING indicated that a split might enable it to improve communication and to provide a more balanced approach to the two employers and their different stakeholders.It suggested that indexation for the two groups of participants would diverge, as the sponsors could introduce different pay rises.“A higher indexation for one group would mean a disadvantage for other groups, as indexation would come at the expense of the pension fund’s coverage ratio,” it said.However, the pension fund, with 71,000 participants in total and a funding level of 136%, has now concluded that continuing as a single scheme is a good alternative.It said it would seek to co-operate with the two new pension funds – ING CDC and NN CDC – within the existing structures, aimed at efficient pensions provision, joint communication, and joint policymaking.It added that it would also look at the options for simplifying pension arrangements and their implementations. The €27bn closed pension fund ING has decided not to divide itself into two schemes in the wake of its sponsoring company splitting.ING Group split into banking arm ING and asset manager and insurer NN Group in 2014.On its website, the pension fund said that, after two years of deliberations, it had concluded that there was insufficient reason for such a move, as this would come at the expense of efficiency.Since the division of ING – required by the European Commission, following government aid in the wake of the financial crisis – the two new companies have each set up new collective defined contribution (CDC) schemes for their staff.
Dutch socialist party SP wants to limit pay for pension fund trustees and service providers’ staff to no more than the salary received by the Netherlands’ prime minister.Bart van Kent, MP for the SP, said he would attach an amendment to legislation implementing IORP II to cap pay at €187,000.He argued that the cap fitted with the EU directive’s explicit reference to “appropriate remuneration”.Currently, this cap – known as the WNT, or Balkenende standard – applies to pay at semi-public organisations, such as hospitals, schools and public broadcasters. Dutch socialists want pension sector workers to earn no more than prime minister Mark RutteHe said he also wanted pension funds to demand that asset managers comply with the WNT rules through a clause in their contracts.The Dutch parliament will debate the IORP II legislation on 26 September.In other news, Gijs van Dijk, MP for the labour party PvdA, has asked the Dutch government why bonuses at pensions providers have risen, while many of the country’s pension funds have been unable to grant inflation-linked increases.He argued that performance fees should only be paid if pension funds granted inflation compensation.His questions were triggered by the recent publication of a costs survey from consultancy LCP, which revealed that asset management costs had risen by almost €1bn, while schemes’ returns had dropped considerably. In Van Kent’s opinion, the pensions system was a special kind of social security in which high salaries were not appropriate, “as the money has been deposited by workers, and most pension funds can’t grant inflation compensation”.The MP also noted that pension funds paying high salaries didn’t perform better than schemes with more modest remuneration policies.
“The ESA’s Sentinel-1 satellite, launched in 2014 as part of the Copernicus scientific programme, is so powerful it can pinpoint and precisely ‘photograph’ pieces of land five meters in diameter through the clouds,” said Robeco in a statement.The asset manager said the data can be used to engage with plantation owners, traders, intermediaries and other actors in the supply chain, as well as to alert authorities of any criminal activity.Peter van der Werf, engagement specialist at Robeco, said: “Building on the annual benchmark of palm oil companies as published by the Zoological Society of London’s Sustainability Policy Transparency Toolkit, which we use in our engagement programme, this project now gives us the ability to develop real time monitoring of the palm oil companies’ commitments to no deforestation.”Addressing sustainability issues in the palm oil industry is a major engagement theme for Robeco this year.Read MoreViewpoint: Spatial finance has a key role to playBen Caldecott, founding director of the Oxford Sustainable Finance Programme and an associate professor at the University of Oxford, sets out how geospatial data can help foster sustainable finance‘Engagement’s not a one-off’ Carola van Lamoen, head of active ownership at Robeco, talks to IPE’s Liam KennedyPRI launches tool to query academic ESG researchThe Principles for Responsible Investment (PRI) has launched a tool allowing users to identify and access academic papers on different topics related to the broad topic of ESG.The Academic ESG Review tool allows users to query a database of more than 900 papers on responsible investment themes, grouped into categories such as asset pricing, climate regulation, “return on ESG”, and tax regulation.The PRI emphasised that the tool is continuously evolving, and encouraged feedback on any papers listed or suggestions for additions, as well as feedback about how people were using the tool.Information about the tool can be found here.Charity fund manager forges modern slavery allianceCharity fund manager CCLA has launched an initiative aiming to build a coalition of investors keen to contribute to the eradication of modern day slavery.According to the CCLA, the initiative – Find It, Fix It, Prevent It – will feature representation from the Investment Association, the PRI, the Business and Human Rights Centre, the University of Nottingham’s Rights Lab, and Rathbone Investment Management.Investors joining the coalition commit to, over the three years, engage with companies in their portfolios “to develop better policies, processes and procedures for identifying then addressing modern slavery in their supply chains”.They would also promote public policy that incentivises companies to report on the effectiveness of their actions to identify and then eradicate modern slavery, and contribute to the development of knowledge about how companies can combat the problem.James Corah, head of ethical and responsible investment at CCLA, said: “We believe that slavery exists somewhere in the supply chain of nearly every company.“Good companies are those that find, and then support, victims of slavery. Sadly, there are not yet enough of them and we, as an industry, have to do everything we can to encourage better action.”Modern slavery refers to forced or compulsory labour, people living in servitude, and human trafficking. Robeco will be piloting the use of satellite imagery data to check if palm oil producers are sticking to their commitments regarding deforestation.The asset manager has signed a letter of intent to collaborate Satelligence, a Dutch company that accesses data from imagery taken by satellites orbiting 700km above south-east Asia, west Africa, and central and south America.It will be the first time Robeco uses satellite imagery for any purpose, a spokeswoman told IPE.The data Satelligence accesses comes from satellites operated by the European Space Agency (ESA), the Japanese Aerospace Exploration Agency and NASA.
Global environmental movement Extinction Rebellion is targeting Somerset County Council Pension Fund with a protest outside the offices of Somerset West and Taunton Council on Friday 28 August at 12pm UK time, as part of its ‘We want to live…’ campaign.On a social media post, Extinction Rebellion said the protest is against Somerset County Council pensions committee’s continued investment in fossil fuels, despite the fact that the county council and four district councils declared a climate emergency in February 2019.The post claims that companies such as Shell and Exxon are planning to expand fossil fuel extraction significantly by 2030. “This is incompatible with the declaration made by Somerset County Council and the four district councils in Somerset to reduce carbon emissions to net zero by 2030,” it said.Nearly 8% of of the pension fund’s £2bn (€2.2bn) assets are invested in companies that fuel the climate and ecological crises. These include companies like BP, Royal Dutch Shell, Rio Tinto and Exxon Mobil, Extinction Rebellion stated. The council’s pensions committee did not respond to IPE’s request for comment.Extinction Rebellion’s post also said the protest would be peaceful, non-disruptive and socially distanced.Similar protests will take place across the county – outside the district council offices in Bridgwater, Shepton Mallet and Yeovil – that day, and at other locations in the South West, the group announced.Aon: smaller bulk annuity transactions soarConsultancy Aon has said that favourable market dynamics in the first half of 2020 led to an increase in the number of smaller bulk annuity transactions relative to recent years.The first half of 2020 saw a near 20% increase in the number of smaller transactions – below £100m (€109m) – compared to the same period last year.The firm expects this trend to accelerate through the remainder of 2020, it said.Its analysis of the market and views from insurers show that several factors contributed to the favourable conditions for smaller transactions:Fewer jumbo transactions in the market compared to last year, which has meant insurers have had more capital and manpower to deploy across a wider spectrum of transactions;An increase in the use of streamlined auction processes for smaller transactions – which particularly helped during recent volatile market conditions;Insurers investing in technology and operational capacity at the smaller end of the market, to increase supply for smaller schemes looking to de-risk.Stephen Purves, partner at Aon, said: “There has been a misconception that smaller schemes struggle to access competitive pricing from insurers, so it is really pleasing to see them taking advantage of these market opportunities and transacting in the first half of 2020.”He said that several factors – including the impact of COVID-19, market volatility and an increased insurer capacity – have led to many more smaller transactions taking place.“This is particularly so when compared to recent years in which larger transactions have dominated – and maybe it has changed the perception of the sort of schemes that should and can come to market,” he explained.PLSA releases climate indexes guideToday the Pensions and Lifetime Savings Association (PLSA) has published the Climate Indexes Made Simple guide, which is sponsored by MSCI, as is designed to help scheme trustees understand how climate change indexes work and how they can help mitigate risk and promote good stewardship.PLSA said that climate change is “becoming one of the most important long-term investment risk factors, meaning trustees have an increasing need to measure and manage climate risk and to build climate resilient investment portfolios”.At the PLSA Investment Conference 2020, pensions minister Guy Opperman made this clear when he said: “If you are in the pensions and savings business, you start with the fundamental principle that you believe saving should be done for the longer term. If you aren’t addressing climate change, there is no longer term. It is the defining issue of the 21st century.”In the guide, Remy Briand, head of ESG at MSCI, said that until now, measuring the potential impact of transitional or physical risks or the economic impact of climate change on portfolios was limited due to the lack of tools available to investors.“We believe climate change will become the most important investment risk factor over the long-term,” he added.To read the digital edition of IPE’s latest magazine click here.
Real estate signInquiry for Brisbane’s unit market is starting to pick up with predictions that sales will also pick up towards the end of the year.Place Projects analyst Lachlan Walker said while the recent lift in inquiries had not translated into sales yet, it was coming.“I get the feeling we are sort of through the worst of it and I think it (the number of sales) will be similar next quarter and then we’ll start to see some pick-up in the back half of the year,” he said.His latest apartment report revealed there had been 144 unconditional off-the-plan unit sales in the past quarter worth $96 million. An artist’s impression of Brisbane 1 which had the highest number of off the plan sales in the March quarter.And units were selling for 5.3 per cent more than at this time last year – this was the second consecutive quarter the average price of off-the-plan apartments increased.The report found two-bedroom apartments were most in demand during the quarter, accounting for 56 per cent of sales, while about a quarter of sales were for one-bedroom apartments.The most common price point for buyers was between $550,000 and $650,000. 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This modal can be closed by pressing the Escape key or activating the close button.PlayMuteCurrent Time 0:00/Duration 0:00Loaded: 0%Stream Type LIVESeek to live, currently playing liveLIVERemaining Time -0:00 Playback Rate1xFullscreenFirst look inside the new W Hotel00:60 Mr Walker said there were 2012 new apartments available for sale throughout inner Brisbane and an additional 3500 apartments expected to be completed by the end of this year.More from newsNew apartments released at idyllic retirement community Samford Grove Presented by Parks and wildlife the new lust-haves post coronavirus18 hours agoHe said the unit market was starting to show “resilience’’ and with the Australian Prudential Regulation Authority now loosening lending restrictions on banks to investors, sales volumes would return to long-term averages in the future. Newstead Central also recorded solid sales in the March quarter. Picture: AAP/ Ric Frearson“Not coincidentally, a large proportion of owner-occupier sales were in recently built or soon to be completed developments. Generally, owner- occupiers are looking for a home, they want to be able to see the finished product before committing.”He said demand for the right product at the right price still existed.“From our conversations within the market, we know that there has been solid interest and sales in recently-built stock which has had to be resold, indicating that demand hasn’t disappeared and buyers are still active.”It predicted that sales figures would not decline further.As a result of demand from owner- occupiers, the report predicted that developers would refocus on townhouses, house and land packages, and more premium apartment product. Lincoln on the Park recorded strong sales. Picture: realestate.com.auIn the March quarter there were 56 projects being sold off-the-plan in inner Brisbane.The report found there were only six unconditional sales within the Brisbane CBD in the quarter but the average sale price was $1.55 million – including a penthouse which sold for more than $3 million.North of the Brisbane River, there were 74 unconditional sales with Newstead Central Laguna chalking up the highest number – nine. South of the river there were 64 unconditional sales with 11 units selling in Brisbane 1 and 10 in Lincoln on the Park.Mr Walker said the majority of buyers in the unit market at the moment were definitely owner-occupiers.The latest apartment report by property consultants Urbis said the owner-occupier market had remained very active even though the investor market had slowed. Director of property economics research Paul Riga said this quarter, owner-occupier sales overtook foreign investor sales, making up 34 per cent of total sales.