Given the rate of expected interest rate cuts , research house Capital Economics (“ CE ”) expect this property recovery to be slower than previous cycles , but we see this as no bad thing . Taking CE ’ s forecasts , this could see investors achieve healthy , sustained returns over a 3-5yr holding period . The Investment Property Forum ’ s UK consensus forecast estimates a total return of 7.5 % per annum 4 from 2024- 2028 for all property , and forecast an increased total return of 8.5 % per annum for favoured sectors such as industrial / logistics . These would be attractive compounding returns with a sturdy income backing .
Such a recovery in returns could be a blessing for the listed space . Most of the REIT and investment trust sector continues to trade at double-digit discounts . It has been battered by the headwinds of interest rate sensitivity , weak sentiment to the UK and in the smaller names , a liquidity discount .
The signs are there of an early recovery , liquid companies in favourable sectors such as industrial / logistics or student accommodation trade close to their net asset values . The small and midcap names could be next . After some creative destruction ( M & A ), sensible balance sheets and readjustment of business models to drive total returns , listed property and infrastructure companies in the UK could lead a recovery in listed real assets .
We never lost the ‘ why ’ for investing in real assets , they remain attractive alternatives as part of a diversified portfolio . Despite all the challenges that have been encountered since 2020 , income , in most cases , has been robust or grown . The wind direction for ‘ why now ’ has changed and despite having taken more punches than any asset class would like , the tailwind behind a comeback looks to be strengthening .
SHOULD YOU WISH TO HEAR MORE ABOUT OUR INVESTMENT OFFERING IN REAL ASSETS , PLEASE CONTACT YOUR LOCAL BUSINESS DEVELOPMENT MANAGER .
1
The Investment Property Forum , May 2024
2
Refinitiv , July 2024
3
MSCI , August 2024
4
Savills , August 2024
Important information : This document is issued in the UK by TIME Investments , a trading name of Alpha Real Property Investments Advisers LLP , which is authorised and regulated by the Financial Conduct Authority . This document does not constitute investment advice and investors are recommended to seek professional advice before investing . Investors capital is at risk . Past performance is not an indicator of future performance . Issued September 2024 .
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