Momentum continues to build behind global property: Lonsec
There is a strong case for investors to include global listed property securities as part of a diversified investment strategy, following continued growth in the sector, research house, Lonsec, believes.
Lonsec's senior investment analysis, Sam Morris, said the improving economic conditions would see direct property markets continue to benefit over 2015, having delivered a total return of 28.4 per cent in 2014.
"The direct property market will benefit from better economic conditions in terms of increasing rental rates, occupancy levels, investment demand and capital values," Morris said.
However, Morris said there was a strong case based on diversification to include global property securities within investment portfolios, he warned that investors needed to be aware of the risk associated with the asset class.
"Property securities tend to behave more like bonds in stable markets but become more like equity in periods of high volatility and crisis. Thus it may be considered preferable for investors to utilise more defensive global property securities funds in their overall portfolios," Morris said.
"We also don't believe investors should be relying upon global property securities funds as a source of income in an overall portfolio context — particularly those with currency hedging overlays.
"The key to investment selection in the global property securities sector is to identify funds managed by high quality investment teams and investment process, but with sufficient levels of active management. In upgrading the Presima and Resolution Capital funds, Lonsec believes it has found two such strategies."
AUTHOR
Nicholas O'Donoghue
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