Investors are set to increase their exposure to bricks and mortar to escape volatility in the debt and equity markets, the property team of one asset manager believes.
Diversification and generating stable cash-flows during turbulent times are attractions, according to Invesco Real Estate.
Income from property is a higher percentage of the asset class’ total return than many other assets, at 49% for listed and 81% for unlisted, Invesco said.
The asset class’ low correlation to equities is another benefit.
Investors could search the globe for stable income-producing assets as the UK offers limited options, the research claims. Indeed, the emergence of pan-regional open-ended funds are allowing investors to open-up their property portfolios to the $26trn global real estate market.
Invesco Real Estate’s managing director of client portfolio management, Simon Redman, said the firm is seeing investors shift to global real estate from the domestic market as they look to diversify.
“For those seeking to expand their exposure beyond their home country, unlisted global real estate potentially offers both lower volatility and stable, bond like income alongside equity like returns.
“Furthermore, low correlation to global economic trends and other alternative asset classes makes real estate a great tool for diversification,” he added. “We expect these factors to drive a growth in real estate investment, especially as the global equities markets enter a new uncertain phase.”