Cookies on the Investment International website
We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on this website. However, if you would like to, you can change your cookie settings at any time.
Continue

New to Investment International?

Welcome, and thank you for visiting our website.

Investment International is the leading publication for investors interested in the world of international investment.

Our aim is to give you intelligent commentary on the most important financial stories, and help you to profit from them. If you've enjoyed what you've read so far why not sign up for our FREE investment alert.

Every week the Investment International team sends out a hard-hitting newsletter packed with news and analysis of the top stories this week plus the best investment opportunities on the market. We always look at the bigger picture like the Eurozone Crisis, and explain how this will affect YOUR investments.


Ask me later
No thanks

Global real estate investment market on firm foundation but doubts linger over Asia PDF Print E-mail
News - Property
Monday, 23 May 2011 08:31

The global real estate market is on firm foundations, holding up well so far this year and can offer some protection against inflation for investors, it is claimed.

Opportunities abound in both developed and developing markets, according to Alan Supple, portfolio manager at Urdang, BNY Mellon's global real estate investment specialist, and a member of the team managing the BNY Mellon Global Property Securities Fund.

‘Despite the continued economic uncertainty, global equity markets have held up well so far this year, and the real estate securities markets have similarly remained relatively stable. Global and US real estate investment trusts (REITs) have generated positive returns, as real estate fundamentals continue to improve and investment in the asset class increases,’ he said.

‘How is it possible that the real estate market seems to be shrugging off these major world shocks? The answer, we believe, is in a combination of investors' need for income, and a desire to protect themselves from the ravages of inflation,’ he explained.

‘Investors are taking on greater risks in the hope of producing higher returns in what is, and is likely to remain, a low-yielding market environment. Fuelled by the US Federal Reserve's quantitative easing programme, capital is coming to market in a very big way, and the result is that the global market's appetite for risk is up across nearly all asset classes, particularly hard assets such as real estate,’ he added.

He believes that with short term US Treasury rates hovering near to zero, economic conditions favour high dividend paying stocks, which often benefit from investors' search for income generating assets.
Meanwhile, REITs benefit from having a low correlation with most other asset classes, while they can also provide a diversified source of returns, and, of course, have the potential to deliver attractive levels of capital appreciation, he added.

‘Within the global real estate market, in those low to modest growth markets which include the US, UK and Europe, we expect rent and vacancy rates to continue to improve. We also expect that speculative commercial development will remain tempered and that buying opportunities may emerge as banks come to terms with deferred reinvestment decisions. As a result, we maintain a positive outlook on returns for real estate in 2011,’ said Supple.

But investors should, however, remain cautious, he warns. ‘While we do not expect a double dip recession, we believe that austerity measures could threaten GDP growth in the second half of the year and affect real estate returns,’ he said.

Meanwhile, in high growth markets such as Asia and South America, he believes that investors may find compelling opportunities, supported by both strong economic growth and their demographic models. ‘However, investors in these markets should be wary of inflation risks, uncomfortable levels of currency appreciation and volatility as a result of government-supported inflation fighting policies,’ he added.

 

Most Read

Latest Guides

New Build UK Student Investment
New Build UK Student Investment
Download

UK Airport Car Park Investment
UK Airport Car Park Investment
Download

UK Airport Car Park Investment
Hever Hotel
Download

Holiday Home Rental Guide
Holiday Home Rental
Download

Investing in Buy-to-let
Investing in buy-to-let
Download

Investing in buy-to-let
Investing in buy-to-let
Download

Discover the real power behind your pension
Hever Hotel
Download

Self Invested Personal Pension Guide for UK Expatriates
key
Download

Offshore Banking Guide
Offshore banking Guide 2010-2011
Download
Pension Planning Guide
International Pension Planning Guide 2010-2011
Download
Eurozone Crisis
Eurozone Crisis Report 2010-2011
Download
Tax Guide
International Tax Guide 2010-2011
Download
Follow us on Twitter
Find us on Facebook