Rising uncertainty and slower growth in the global economy bodes well for global property equities, especially in sectors expected to benefit from the disruptive forces of technology and innovation globally.

Key takeaways

• REITs offer investors a predictable and stable income option for investors as they look for more defensive assets
• The relentless growth of e-commerce, especially in the US, will ensure logistics remains an attractive sector for many years to come
• Co-working, data centres and cell towers represent a multi-year structural growth story in global property

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How well positioned is listed property within today’s uncertain macro environment?

Xin Yan Low: It actually all bodes pretty well for global property equities, just because the sector is seen as very stable, defensive and REITS are basically vehicles which have predictable cash flows backed by stable real estate assets. So in this kind of environment I think the defensive nature of the sector really stands out, and with lower for longer yields, as well as negative-yielding debt piling up, I think REITS which do provide a very strong income proposition in the form of high dividend yields would be favoured by investors.

Why are certain sectors more and less appealing going forward?

Xin Yan Low: So one of the big thematic trends we are seeing is the rise of ecommerce and the loser of that is the retail sector. So I’m sure people have heard the term the death of shopping malls, and we’ve seen that play out quite significantly, particularly in the US, which is very over-retailed. But even though we have seen very strong growth in ecommerce over the last decade or so, I think e-commerce penetration across different countries is not particularly high.

So there is still room for further growth here and we do expect high street shops to continue to see store closures, and that will continue to hurt the sector. On the flipside of this rise of e-commerce, a winner from this is obviously logistics; so the traditional sheds of the past are becoming the new shops of the world today. And with increasing demand for online sales you will need more warehouses to store the goods, and this will continue to drive strong demand in the logistics sector, in our view.

Where do you expect to see some of the key logistics-related opportunities in Asia?

XIn Yan Low: We are more positive on Japan, simply because we have actually seen, in the past decade, very, very strong supply response to that growth in demand on the logistics side that has capped rental growth. But in 2020, it will be the first time in a decade that we actually see supply decline in the Japan logistics space. With the very strong demand forces there, we actually are very positive on rental growth coming through the Japanese logistics market.

How else will disruption in real estate impact the appeal of newer sectors?

Xin Yan Low: With technological advancement, data centres are a new sector that the real estate space has seen. We call it the infrastructure of the internet. With the rise of big data, the growth of smart cities, increased internet of things applications; I think we can only see the demand for data grow. And with that growing demand in data you need somewhere to store these and there is a continual need for more data centres.