It is the Catch-22 of an economically developing world. As the planet becomes wealthier and more widely educated, fertility rates decline and populations age. Those demographic mega-trends are a one-two punch to the planet’s continued economic expansion. Dwindling populations, economists tell us, are synonymous with shrinking markets and retreating economic opportunity. How does an economy expand when its base of participants withers away?
From the Current Issue
Institutional Real Estate, Inc. now provides qualified institutional real estate investors with unlimited, 24/7/365 access to its exclusive FundTracker database. Developed in 1996 but now available for the first time commercially, this comprehensive database also is available to investment managers, consultants and others who have a need to monitor and track institutional real property investors, investment managers, consultants and their investment offerings, allocations, commitments and deals.
I have spent the past four years not in the leisurely retirement I had planned, but right in the middle of the action at one of the nation’s largest institutional investors — a major public fund. It has been amazing how much I have learned about the way a major investor thinks and operates — a level of knowledge I wish I had when I founded my old investment management firm more than 25 years ago.
When the global financial crisis brought the economy to a standstill, real estate moldered. The so-called built environment was already rife with functionally obsolete structures. But when a wide swath of buildings suddenly became financially distressed, strapped owners did not have the capital or available financing to invest in care and maintenance, let alone bring their edifices up to modern grade.
Europe is in, the BRIC countries are out, and there is still upside in core investing. That is a partial synopsis of some of the Quick Tally votes cast by investors, managers and consultants at the spring Editorial Advisory Board meeting of The Institutional Real Estate Letter – Americas.
The Washington State Investment Board, falling into a growing trend among institutional investors, has taken a shine to real assets. The pension system has invested $700 million between four commitments in “tangible assets” since February, with another commitment worth up to $150 million pending a June vote.
The world is going shopping — and nobody is doing it more aggressively than the Chinese. There are unprecedented levels of global shopping center construction, according to a new report from CBRE Global Research and Consulting, with 105.5 million square feet of new space opened in 2013 in the 180 cities surveyed, compared with 78.6 million square feet in 2012.
Senior housing investors have enjoyed a good run of solid investment returns for the past 10 years. Those who invested a decade ago have also witnessed the gradual maturation of a property sector that traditionally has not been on the menu of conventional or alternative investment options. Today, senior housing increasingly is being chosen as an investment option because it provides consistently high income returns, relatively steady and less volatile rent growth, and an inroad into a sector whose demand drivers are compelling, intuitive and understandable.
It is not quite an industrial revolution, but the U.S. industrial market has come on very strong of late, as sales ballooned to $47.0 billion in 2013, up 15.5 percent from 2012, according to Real Capital Analytics.
A common question received by commercial real estate professionals is, “How is the market doing?” This is a tricky question because the commercial real estate market is so diverse. Are you talking about a large Manhattan office building or a small apartment complex in El Paso? Answering the question on market performance is similar to asking a bunch of blindfolded people to touch an elephant and then describe what they are touching; it depends on where you stand and what you touch.
There is nothing like getting off to a fast start. The law of inertia tells us a body in motion tends to stay in motion. With momentum and physics on its side, the U.S. commercial property market has laid the groundwork for another year of higher fiscal altitude.
After earning investors trifling returns during 2013, U.S. REITs appear determined to redeem themselves this year and have gotten off to an impressive start. Through the first four months of this year, the FTSE NAREIT All REITs Index is up 11.7 percent, and the FTSE NAREIT All Equity REITs Index is up 11.8 percent, easily outdistancing the S&P 500 Index’s January through April gain of 2.6 percent.
There was no fanfare when NCREIF released the latest numbers for its key Open-end Diversified Core Equity Index (ODCE). And why should there have been? Total returns (before fees) for first quarter 2014 were a paltry 2.52 percent — the lowest total return since fourth quarter 2012. That compares unfavorably even with the muted returns of 2.68 percent during the same quarter last year, and returns of 3.17 percent during fourth quarter 2013.
A new report has taken a look at ultra-high-net-worth investment in residential property around the world, and highlighted 12 “cities on the rise” that are “likely to outperform the prime world cities with growth from a low base as they become more fully invested.”