Publications

- May 1, 2015: Vol. 27, Number 5

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The bucket list: Applying value investing to real estate

by Alistair Dixon

Global property news headline: “Asian investor purchases landmark building for record price, fanning the flames of an already hot market.” Local owner: “What can we sell them next?”

Global gateway cities such as London, Sydney and New York City are attracting unprecedented interest from international real estate investors. Transparent, liquid and with strong rule of law, these locations are hot spots for Asian and Middle Eastern pension, insurance and sovereign funds. In my experience, the vast majority of these investors want the same thing: long-term, income-producing investments that offer an attractive spread over today’s low-yielding fixed-income assets.

Danger signs …

A great deal of capital is chasing a limited number of suitable income-producing properties. This not only drives up prices, but also makes securing a deal difficult. Property teams at global institutions are under pressure to put their capital to work and meet th

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