House view: September 2018

Global Real Estate continued to grow in August 2018 with a return of +2.3%.


Global Listed Real Estate markets gained 2.3% in August. Broad equity markets have returned 1.8%, underperforming the REITs markets by 50bps. We believe August’s returns are mainly driven by healthy US economy and global growth.

 

Since the start of 2018, the North American REITs markets have shown disappointing returns and volatility. However, since mid-April until mid-August, we observed the strongest rebound in the United States. The EPRA United States Index grew by 25% (in EUR, Net) while Europe gained only 3.8% and Asia +5%.

 

Themes in Focus

Downside risks

Future global economic expansion is ar risk with growing US-China trade conflicts.

Government bond yields

Current 10-year US yield has reached the psychological barrier of 3%, considered as an equity-to-bond shifting point for investors.

Valuation

REITs are trading below value with estimated consensus of 10% below valuation. US REITs are the most attractive now, followed by Continental Europe. Asian REITs are on the other hand expensive and have shown strong outperformance the last 12 months.