Think outside the box for property ideas

DWS has been increasing its allocation to real estate and is expanding its weights beyond traditional office and retail sectors.

In an investment update, Sean Taylor, chief investment officer for Asia Pacific at DWS, said the firm had been increasing its allocations to real estate and real estate assets.

It was now overweight both liquid real estate and physical assets in developed markets in its multi-asset model portfolios.

“This was an industry that was punished by COVID-19 and stocks went down more than people had expected. But the fundamentals are robust and there is lots of potential there,” he said.

“There were a lot of worries about retail thanks to e-commerce taking share and for commercial offices because of the move to work from home but we are looking for opportunities that will benefit from the new economy especially if the US goes ahead with its infrastructure plans.

“If we have more electric vehicles, we will need more infrastructure and if there is more cloud computing and cyber protection then we will need more data centres so we are investing more in those areas.”

Meanwhile, he said the portfolios were underweight to China, particularly Chinese internet companies, and preferred A-shares over the broader MSCI China index as these were more resilient to regulatory changes and were driven by domestic investors.

There were lots of regulatory changes taking place in China at the moment affecting technology companies and private education firms and some fund managers were opting to reduce their weightings in light of this.

“The outlook for Chinese equities is pretty good next year, relative to developed markets, but there is a caveat that the next three months will be driven by regulation,” Taylor said.