Publications

- November 1, 2020: Vol. 12, Number 10

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Staying ahead: Generating superior returns in the Australian real estate market

by Leonie Wilkinson

Regardless of the COVID-19 pandemic, global demand for income-producing real assets, which has been on an upward trajectory, was always going to be amplified while interest rates were low. What the pandemic has done, however, is increase the likelihood rates will stay at low to zero levels almost everywhere for some time yet.

Zero to low rates have great influence on real estate, particularly regarding the valuations of assets. Streams of income that have durability will be even more valuable when markets recover, as low interest rates make cashflows from investments such as real estate even more compelling. It is very likely long-let property assets will have higher valuations a year from now than they did a year ago.

These features attract investors that aren’t getting the yield they’re used to from investments such as bonds. For some time now, they’ve been rotating into alternative investments such as real estate and infrastructure, and this trend is only expe

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