Investors making the decision to allocate to listed property are looking beyond a single-strategy portfolio to meet their financial needs and want to diversify across a larger selection of assets, according to Principal Global Investors executive director of real estate Patrick Halter.
Rather than meeting a specific mandate, most investors are looking to solve a problem, whether that is to boost income or to build a more diversified portfolio by investing outside of local strategies – and they want fund managers with a wide array of investment options to do it, he said.
In Australia, for example, there are a limited number of real estate investment trusts (REITs) on offer but, from a global perspective, there are in excess of 900, he said.
"Investors want diversification relative to other asset classes, but also diversification within REITs," Halter said.
"They also have a desire to be part of economic systems that are in some ways defensive and in some ways offensive – so depending upon demographics and economic growth they like to have the ability to move fairly quickly into other markets, and that's what global REITs provide because the liquidity is good."
He said investors today are risk-averse and are demanding strategies that they can understand.
According to Halter, global REITs are transparent enough so that investors are aware of where cash flows are coming from and can generate a steady income in the process.
