Key takeaways:
- Listed property enables investors to benefit from global ownership of high-quality real estate assets with professional management platforms and daily liquidity. The majority of property income is derived from contractual leases, providing a high degree of certainty.
- Unlike fixed income, REITs can grow cash flows. Rental contracts are often linked to inflation, a key advantage when rates and inflation are rising.
- Over the longer term, listed property has delivered higher returns and low correlation compared to broader equities and bonds, offering an efficient way to diversify portfolios and potentially enhance risk-adjusted returns.*
*Nareit, FTSE EPRA/Nareit Global Index versus MSCI EAFE and Bloomberg Barclays Global Aggregate Bond Index, from February 2005 to December 2021. Past performance does not predict future returns.
Real estate is a continuously-evolving asset class. Structural trends are transforming certain parts of the market and leading some historically ‘core’ property types towards irrelevance. This underpins the need for an active and selective investment approach. This evolution gives rise to opportunities for investors to benefit from the ongoing divergence across property types, driven by secular themes such as changing demographics, digitisation, sustainability and the convenience lifestyle.
While not immune to the changing macroeconomic landscape, real estate has the ability to provide more dependable income streams, diversification benefits and the potential for inflation protection over time.
JHI