Investors - MAY 16, 2022

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European government is a real estate sector with many advantages

by Pierre Escande, Union Bancaire Privée

At a time when financial markets are seeing highly volatile securities prices and the prospect of higher inflation in the short and medium term, alternative investments in private markets make a lot of sense.

Government real estate, in particular, holds a number of advantages for institutional investors looking for a long-term home for their money that combines excellent visibility and competitive yields.

If visibility is a crucial criterion when selecting an investment, government real estate has attractive features for investors who are also looking for diversification, security and yield. Properties rented by governments represent a real estate sector that is too often overlooked by institutional investors, and one that offers several advantages. Tenants are sovereign entities with good credit quality; fixed lease terms are longer than with corporate tenants (longer than 15 years on average); and yields are attractive compared with standard commercial real estate. F

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