Insights

It’s been a tough six months; not only for listed real estate, but for most risk assets as well. Even the natural portfolio risk dampener, sovereign bonds, has suffered. 

In global real estate, there has been no sector that has enjoyed more demand tailwinds over the past 10 years than industrial.

Listed real estate has performed well relative to broader equities, again proving itself a defensive asset class during periods of high inflation and rising interest rates.

In August last year, we highlighted that real estate (listed and direct) tends to outperform equities during periods of high inflation.

Just as we seemed to be passing peak inflation (port access has been improving and second hand car prices declining), the recent attack by Russian forces into Ukraine has resulted in another spike in commodity prices.

According to CoreLogic, Australian house prices increased +22.1%[1] in 2021, led by Australia’s largest city of Sydney (+25.3%).

One of the less than expected by-products of the ‘COVID cycle’ has been the boom in household savings.

One of the many accepted truisms in real estate is properties with a long WALE (weighted average lease expiry) tend to be lower risk.

As vaccination rates increase around the world and we (hopefully) return to some normality in our daily lives, world economies appear to be stabilising. Economic output is near or above pre-pandemic levels, and signs of inflation and wage pressure have become a theme of 2021.