Real estate investors looking to the US, Asia and Brazil, summit hears

Investors hunting discount real estate are eyeing the mature markets of the United States and Asia, as well as emerging Brazil, lured by the total returns on offer compared with crowded European markets, it is claimed.

The compression of cap rates in core European markets has led investors to shift their focus to the US where yields are still quite affordable and property values, which have recovered, represent good value, according to Scott Latham, vice chairman of Jones Lang LaSalle.

While property values in New York and Washington D.C. have bounced back to levels close to their peaks, other US cities have yet to embark on a similar pace of recovery, opening up opportunities to profit from the imbalance.

The market values of office buildings, shopping malls, apartment buildings and warehouses across the United States in May were 44.6% below their peak prices in 2007, the latest Moody's/REAL All Property Type Aggregate Index shows.

‘You look at some of the prices of real estate in the United States and you would like to think there is significant gains to be made as they come off their lows,’ Richard David, chief executive of the Treasury China Trust.

Other property experts favoured mature Asian commercial property markets, such as Singapore, Hong Kong and Shanghai, due to the region's strong economic growth and ample liquidity.

‘What I like as a theme are the major cities in Asia-Pacific. They're growing in terms of population, they have strong GDP growth,; said David Schaefer, DTZ's international director of Investment and Asset Management.

Asian financial hubs Hong Kong and Singapore are expected to both post gross domestic product growth of at least 5%, according to official data.

Stiff rivalry for safer prime European property has seen yields fall in popular core cities, such as London and Paris, causing investors to look toward riskier markets to find better total returns.

Several experts attending the Reuters real estate summit named Brazil, host of the 2014 football World Cup and 2016 Olympics, as their top emerging market pick, citing its stellar economic growth and the potential to profit from the country's under developed infrastructure system.