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Many investors have understood the value of investing in domestic markets.

But at present most of the investors are interested investing in international


real estate in order to improvise their investment portfolios. By following this
a global perspective in the real estate investment can be introduced that
would increase the rate of opportunity for investors. For example when
United Kingdom is considered, according to FTSE EPRA and NAREIT its
property market is about 5% of global real estate. It is also found that the UK
investor who only invests in the domestic market losses 95% in the universal
investment. It not only happens in the small markets whereas investors in
large property market also restrict themselves by investing only on domestic
markets.
A structural shift to global real estate
The real estate has enjoyed maximum flow of funds towards its asset class.
As per the reviews of European Public Real Estate Association, such changes
have happened within the last few years. Such changes in the structural
change have influenced the hangover from minimum allocation on the real
estate that happened in the year 1990s. When compared with the UK it is
found that the allocation for real estate are comparatively low.

The dynamics of global real estate are different


The other main factor that should be considered is the global property
market that fails to move along with real estate.

the price of the same

property varies in different place. An effective management should have the


ability to exploit both inefficiencies and differentials in the universe in order
to offer better returns to the investors. By following this, the property
downturn can be limited to a great extent.
Real estates role in liability-driven investment
Pension funds that mostly focuses on long term liability is increasing day by
day to invest on real estate. Real estate is considered to be the most
prominent investment that doubles the amounts that is invested by the
investors. Investment on real estate is found to be the most perfect one for

pension funds. At present, as per the estimation the real estate has yield
around 9.7% when compared with previous years where it was around 9.0%.
Comparison has also been done by investors on fixed income yields that
measures relative values. To be more specific, institutional investors should
invest their funds on long-term liabilities which in turn results in more income
to the company.
The opportunity set is large and expanding
It is also encouraging to see that the global opportunity set continues to
increase.

The opportunity in the global level is increasing day by day. The most
important criteria that should be considered is identifying the appropriate
opportunity to invest on assets. It is the view of sophisticated investors that
real estate is a better source for their income, growing their capital and
diversification in their portfolio. Both transparency and liquidity that is
followed in the public marketplace has improvised the investment on real
estate. Expansion of both REITs and public real estate to the global level is
considered to be the most vital state in the market evolution. The investment
on real estate is considered to be better investment for institutional
investors.

Growth of listed real estate


The companies listed below are considered to be the best investors in the
real estate in the global market. As per the research conducted in the year
2003 by FTSE, EPRA and NAREIt has proved that the securities provided for
real estate, the index of global real estate are found to be increasing when it
is compared with the movements of the global market.

The below table reflects the estimated composition of real estate globally,
based on EPRA data. EPRA estimate the total real-estate market (including
China, yet excluding all other emerging markets) at US$15.6trl. Of this figure,
listed real estate only represents US$1.1trl, or 7.3% of the total.

Conclusions

Global investments are becoming an increasingly important component of


investors allocations. With global portfolios and real estate offering strong
diversification benefits on their own, combining the two into one strategy can
only further enhance those diversification benefits. Additionally, with the
asset class traditionally viewed as delivering high-yielding returns, along with
the ability to make capital gains, these distinctive characteristics offer a very
compelling risk-return profile for investors.

Along with the short-term positives, the long-term fundamentals remain


intact. With the flexibility of a broad range of investment across a large and
increasing investment universe, it offers great opportunities to achieve both
capital and income gains. In fact, we believe that investing in global-listed
real estate is set to become an enduring theme in investors portfolios. Over
the near term, however, we may see volatility remain to the fore; with this
only dissipating once credit markets normalise.