MARKET VIEW 13
High rises: in times of record high inflation and rising interest rates, the asset class of listed real estate stands out by offering investors effective protection. „
During historical periods of rising interest rates and high inflation, REITs have generated positive total returns and outperformed equities. Geoffrey Dybas portfolio manager at Duff & Phelps Investment Management
“We expect cash flow and dividend growth in the global listed real estate space to accelerate further over the course of 2022 as economies continue to recover from the Covid-19 downturn.” A universal evolution However, despite its well-known qualities in an environment of rising rates and elevated inflation, there is still some investor pessimism directed towards real estate. This is largely because of the underlying dynamics affecting traditional property sectors – such as retail and offices. The challenges facing the retail sector have been apparent for many years, as the rise of e-com- merce permanently altered the fundamentals of brick-and-mortar assets. Offices have also come under recent scrutiny, as the Covid-19 pandemic overhauled established working practices. But the real estate market has evolved significantly over the past decade, with the number of REIT sectors growing from nine to twelve. In 2010, traditional
property types – such as retail centres, residential, healthcare and offices – featured heavily in the REIT universe. Now, however, the real estate opportunity set encompasses many fast-growing areas of the advancing global economy. “We see a number of secular trends positively impacting the global real estate securities market over the long term. For example, the growth of e-commerce and the online economy has fuelled rapid growth in demand for industrial properties focused on ware- housing and logistics,” Haggerty says.
ISSUE 01.2022
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