Brand, intellectual property and real estate will be the key stores of wealth in the future. The question for investors is where and what to buy to store wealth for the next 10 years.
Rana Foroohar, from the Financial Times, gave that insight in her keynote speech at the ANREV conference late last year, causing a happy stir in the audience. Institutional investors in real estate are well placed to provide a home for savings and incomes in the future.
In a world where the real US 10-year government bonds rates have delivered roughly 1% per annum over the last 10 years, Asia Pacific office total returns have averaged 9.6% per annum over the same period. Although not directly comparable, it is pretty compelling.
The question for investors is where and what to buy to store wealth for the next 10 years.
At the start of 2018 we are observing a globalised economic recovery with all three regions growing. This year we should start to see a quickening of interest rate rises to a more normal nominal level following the global financial crisis.
However, interest rates are part of a longer global downward trajectory for which there are mixed opinions as to the cause[1].
Regardless of this 30-year cycle, central banks are signalling that rates may rise should inflation take hold. The potential for inflation to lift as growth continues means that even as nominal levels rise, the level of real rates is likely to be much lower than pre-GCF.
Low real rates and the prospect of inflation will continue to see investors allocate to real estate, either towards 10% of their portfolios or even greater for those well-versed in real estate investment.
The growing global economic recovery provides a broad swathe of real estate demand. You can find our short-term outlook for…
