Where Are the Risks?: Real Estate Investors Are Playing Safe on Property Investment Decisions but Are Their Safe-Haven Decisions Really That Safe?
1 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