Insight

Why could there potentially be a real case for global real estate?

24 June 2022
Mike Bessell
Mike Bessell
Managing Director, European Investment Strategist
Nick Buss
Nick Buss
Senior Director, Research
Katie Seamans
Katie Seamans
Global Research Associate
Why could there potentially be a real case for global real estate?

Why could there potentially be a real case for 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 relatively stable income potential, underpinned by long-term leases, makes it a compelling alternative to traditional fixed-income instruments.

Real estate investors around the world have tended to be domestically focused, but many are now investing across global real estate markets. Large institutional investors and sovereign wealth funds have been at the forefront of the shift to global real estate investment, driven by the generally stable income component and the potential for diversification benefits, risk reduction, and return enhancement.

During the current period of rising inflation, global real estate may become increasingly attractive. Direct and listed real estate assets have been mildly positively correlated to inflation since 2010, rather than the typically negative correlation seen in equities or bonds. Different asset classes will have different levels of investor risk.

These attributes lead us to conclude that adding real estate to a broader multi-asset portfolio could offer the potential to achieve diversification benefits without giving up investment returns.

Read our whitepaper to discover why real estate may offer such a compelling opportunity for investors.

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  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

    Property and land can be difficult to sell, so investors may not be able to sell such investments when they want to. The value of property is generally a matter of an independent valuer’s opinion and may not be realised.

  • This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

     

    Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.