Something for Everyone: Conditions Are Improving in Real Estate Markets Around the World, and the Opportunities Are There to Be Grasped
In 2009, the significant increase in equity values, contrasted against the severe contraction of real estate values, allowed the equity markets to outperform the non-listed real estate market. Despite these recent conditions, risk-adjusted returns for real estate over a 10-year timeframe remain attractive relative to bonds and have far exceeded the equity market. Thus, the performance attributes of real estate can provide benefits in a global multi-asset portfolio.
The recent trend of declining real estate values appears to be slowing across major regions of the globe. In the United Kingdom, for example, prices declined by 26 percent in 2008, but the pace of decline slowed significantly in 2009, as prices were down by only 3.6 percent.
The U.K. decline in values for 2009, as measured by the IPD U.K. Annual Index, masks a year of “two halves”: the first half saw a decline of 12.4 percent and the second half an increase of 9.8 percent, as sentiment impr