Considerations for investing in global real estate
Many investors are familiar with the appeal of holding real estate. With a generally low correlation to other asset classes, it can serve as an instant diversifier in a mixed-asset portfolio. Historically, real estate has delivered strong relative performance across multiple cycles compared to other asset classes, and its characteristic stable income, underpinned by long-term leases, makes it a compelling alternative to traditional fixed-income instruments. Investors continue to allocate to alternative investments. Despite interest rate hikes and decelerating deal flows cooling the real estate market in H1 2023, real estate fundraising momentum remained steady through Q2 2023. Value-add strategies are currently the most popular amongst investors, looking to take advantage of market dislocation.
In their paper the Global Investment Strategy team consider five elements for investing in global real estate:
- Current market conditions,
- Ways to invest in real estate,
- The depth and liquidity benefits of global real estate market opportunities,
- The case for long-term investment horizons, and
- How the addition of nondomestic real estate exposure may serve to enhance returns and lower risk in a multi-asset class portfolio.
