As the economic turmoil in the euro zone continues, investors across the globe are searching for safety and security. Government bonds, for those countries considered relatively safe, are trading at levels not seen in generations. Even the loss in 2011 of the coveted AAA rating does not seem to have made much of an impact on US Treasuries. The recent placing of the United Kingdom on a negative outlook, with a 30 percent chance of an actual downgrade from its AAA rating within 18 months, does not seem to have affected the country’s borrowing costs. Other safe havens include investment-grade corporate bonds, with US corporate bonds, for example, trading at levels not seen since records began in 1973.
With the flight to safety and with interest rates at historic lows, investors from around the globe are piling into core, prime, UK (read London) real estate assets. These investors are typically looking for wealth preservation over a long-term period.