Finding value beyond the averages: Identifying promising pockets of opportunity
Where are global investors likely to find attractive real estate opportunities? With economies in mid to late cycle, interest rates rising and properties priced to perfection, it’s a fair question. Global core returns have averaged just over 10.5 percent since late 2010. Valuations have been a significant driver of those returns, however, leaving much of the market fairly priced.
Finding value requires looking beyond the averages. Regional markets are at varied stages of the cycle and monetary policy normalisation. These differences, and a host of distinct dynamics across and within regions, styles and sectors, create pockets of opportunity.
Don’t underestimate US core
For the past several years, many investors in US real estate have tilted their new allocations to value-added properties in the search for higher returns. We see this trend at an inflection point. Driving the shift is a sizable rise in construction costs for property impro