David Paine, head of real estate, Standard Life Investments
Weaker investor confidence over global growth has resulted in a hasty retreat from risky asset classes in recent weeks. However, such indiscriminate selling has also created opportunities for investors to exploit inconsistencies and uncover value.
One area that we continue to regard as an attractive component of a diversified, multi-asset portfolio is global real estate. Good quality commercial property is likely to remain resilient despite the global economic slowdown, which we expect to result in a period of weak growth rather than outright recession.
Real estate also benefits from a relatively secure and sustainable yield compared to other assets. In addition, the weight of money looking to invest in commercial real estate remains reasonably strong and we do not foresee this changing for higher quality ‘safe haven’ exposure.
On a fundamental basis, a modest recovery is materialising in most global real estate markets. This is consequently leading to improving tenant demand as occupier confidence and business investment increases.