Global Real Estate Is Hot Again, but Where Are the Best Opportunities?

Global Real Estate Is Hot Again, but Where Are the Best Opportunities?

In this low interest rate environment, yield-hungry investors have been moving out of bonds, and many are opting for real estate investment opportunities. Combine that with a structural undersupply of institutional quality real estate in many key cities across the globe, and an attractive case for investment starts to emerge.

Here’s where we see the most attractive and promising opportunities by region this year.

US

In the US, we see the multifamily (apartments) sector as the most attractive opportunity. The US market is currently experiencing accelerated existing rental property growth given a dearth of new construction projects. Multifamily properties, however, have been the exception to that trend as new construction increased for that sector in the first quarter, bringing it closer to the long-term average.

Europe

The European market is currently divided. There are some parts of Europe, such as Spain and Greece, that are plagued by slow economic growth, which has weakened tenant demand. In perceived safer markets — such as Germany, Poland and London — we have seen strong capital flows and tenant demand that has outpaced supply.

Asia

Japan has been leading the growth in Asia with its strong share price performance, particularly in the Tokyo office market, where tenant demand has been strong. However, we believe investors should exercise a bit of caution with Japan, as its performance growth might be more the result of monetary policy than changes in its fundamental real estate landscape.

Outlook

For the remainder of the year, we expect the focus on income by investors to continue as interest rates are likely to remain low. In this environment, we believe the case for real estate investments may be compelling, and that understanding local market economic drivers is vital to navigating this asset class.

Learn more about why 2013 is a year for real estate.

 

Important information

Investments in real estate related instruments may be affected by economic, legal, or environmental factors that affect property values, rents or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies and their shares may be more volatile and less liquid. The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

Joe Rodriguez, Jr.

Managing Director

Head of Global Real Estate Securities

Invesco Real Estate

In addition to portfolio management, Mr. Rodriguez is a managing director and the head of real estate securities for Invesco Real Estate, where he oversees all phases of the unit, including securities research and administration.

Mr. Rodriguez began his investment career in 1983 and joined Invesco Real Estate, the Dallas-based investment management affiliate of Invesco Institutional (N.A.), Inc., in 1990. He has served on the editorial board for the Financial Times Stock Exchange National Association of Real Estate Investment Trusts (FTSE NAREIT), as well as the editorial board of the Institutional Real Estate Securities newsletter. He is a member of the National Association of Business Economists, American Real Estate Society and the Institute of Certified Financial Planners. He has also served as adjunct professor of economics at The University of Texas at Dallas.

In addition, Mr. Rodriguez was a contributing author to Real Estate Investment Trusts: Structure Analysis and Strategy, published by McGraw-Hill. He made contributions as editor and author to several industry publications, and has been featured as a real estate expert by both financial industry print and television media such as CNBC and Bloomberg News.

Mr. Rodriguez earned a Bachelor of Business Administration degree in economics and finance as well as an MBA in finance from Baylor University.

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