Where Are the Risks?: Real Estate Investors Are Playing Safe on Property Investment Decisions but Are Their Safe-Haven Decisions Really That Safe?
In this article, we would like to consider the renewed flight to quality that has been triggered by the sovereign debt crisis and examine the merits of investing in safe-haven locations and in corporate bond–type properties with very secure income streams. We believe that these assets carry more investment risk than is often realised and that secondary class A properties in northern Europe, which have good bricks and mortar fundamentals but which are perhaps compromised by a weak tenant or a short lease, offer better investment value.
THE FLIGHT TO SAFETY
Unsurprisingly, the uncertainty caused by the sovereign debt crisis, the potential damage to Europe’s banking system and the knock-on effects on corporate earnings have led to a renewed flight to safety in the investment world. As this article is being written, US 10-year Treasuries, UK 10-year Gilts and German 10-year Bunds are all trading at either record low yields or at levels