Perhaps the first caution flags were raised in September 2017, when the US Federal Reserve announced it would start to sell its US$4.5 trillion hoard of Treasuries and mortgage-backed securities acquired during the Great Recession, also known as the global financial crisis. For denizens of the institutional real estate scene, especially in the Asia Pacific, the Federal Reserve’s resolve has been the topic of nearly daily commentary.
From the Current Issue
The buzz around autonomous vehicles, which drive without the need for human interaction, seems to be everywhere, with major automakers and technology companies joining forces to revolutionise the transportation industry. They promise to change the way we travel, while saving lives, conserving resources and freeing time for more productive uses along the way.
Festering trade wars, frenzied populism, faltering US stocks, China’s bureaucratic fiddling, plummeting emerging-market currencies, geopolitical tensions — the list of hindrances to real estate performance in 2019 is long.
The logistics property sector has proved to be a solid asset class, providing an attractive return profile over time. Investment in logistics has increased considerably, as this property asset class has gained favour with investors, leading to more transparency and liquidity.
Korean institutional investors intend to increase their allocations to overseas infrastructure in 2019, nearly twice those planning to boost their overseas real estate investment next year, with global real estate portfolios already having reached their target allocations for a number of these investors, according to a survey of 23 CIOs conducted by the Korea Economic Daily ahead of the ASK 2018 Global Real Estate & Infrastructure Summit held in Seoul on 23 October 2018.
After surpassing the 10 percent threshold in 2017, average target allocations to real estate for institutional investors increased to 10.4 percent in 2018, up 30 basis points year over year, and up roughly 150 basis points since 2013, according to the 2018 Institutional Real Estate Allocations Monitor, produced in October 2018 by Cornell University’s Baker Programme in Real Estate and Hodes Weill & Associates.
After this past October’s dismal performance across the equities universe, real estate stock performance was strong in November 2018, with global property stocks significantly outperforming global equities due to a more risk-adverse posture.