Think/2013: A global outlook

Few asset classes have been able to weather the fallout from the financial led recession and subsequent sovereign debt crisis.

The disorder of equity and bond markets and subdued growth forecasts has raised the need for greater risk averse management and for securing long-term growth via lower risk assets. This is particularly the case for asset allocators that have an asset-liability matching strategy, whereby a growing, ageing, wealthier population require funds to hold less volatile investments.

A shift towards more defensive real estate strategies since 2008, reflects this desire for liquidity against a backdrop of political and economic uncertainty.

With investors starved of income and concerns attached to credit risk, the attributes of tangible assets, such as real estate, offer investors additional protection in the form of collateral security. In light of this, as solid income and the opportunity of added value or asset management have become increasingly desirable, the virtues of real estate have attracted further investor interest.

Regulatory changes for pension funds along with new capital adequacy requirements for other institutional funds have reinforced this trend.

The rationale for real estate as an investment asset and the virtues of a diversified real estate portfolio across sectors and markets is compelling. Ultimately, any investment case will be determined by the size of the investor’s portfolio, liquidity, income and return requirements and risk tolerance. Here at Henderson Global Investors, we are able to offer a full spectrum of investment fund services, all of which are supported by our Research team.

Principal to the Henderson investment strategy is a process which incorporates our macro views in conjunction with local expertise to identify and unlock market opportunities.

Here, alongside our review of the case for real estate, we provide you with a guide to current global real estate trends and our views on the sectors and markets that offer healthy risk-adjusted returns in what has proven to be a turbulent period for fund managers globally.

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- Alice Breheny
HGI Head of Research, Property