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Global real estate allocations: future trends

Mike Keogh

Michael Keogh, Associate Director of Research & Strategy, provides an insight into the future trends of global real estate investment allocation.

The PWC Emerging Trends in Real Estate report provided some useful insight into potential regional capital flows into 2015. What is clear is that global real estate intentions reflect the increasingly global nature of investor mandates, whether in search of return, yield or greater diversification, aided by new legislation, in some cases encouraging non-domestic real estate exposure. The latter is seemingly most apparent for Asian investors, who have the potential to grow significantly in role and ownership outside of Asia. As the chart shows, Asia-based investors are predicted to be the largest foreign investors in North America and Europe over the next 12 months.


Source: Preqin Ltd. Preqin Investor Outlook: Alternative Assets, H2 2013

To understand an investor’s required return in a market, is to understand its domestic (regional) economy, regulatory environment and comparable competing asset returns. In the current low growth, low inflationary, low interest rate, but highly volatile financial environment that is rewarding real estate for its defensive yield qualities, attention is firmly fixed on monetary policy. The trend of increased global real estate allocations is one to stay, but as Central Banks become more divergent from mid-2015, the timing, direction and scale of capital flows will differ. Success will come from anticipating the right timing of those tactical and strategic positions.

 

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Michael Keogh

Mike Keogh

Director of Research

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