Asia-Pacific leading recovery for REITs, Urdang says
Urdang, the real estate investment manager and part of BNY Mellon Asset Management, sees the Asia- Pacific region leading the global recovery for real estate investment trusts (REITs) on the back of the rapid growth of the economies in China, Hong Kong and Singapore.
Strong-performing REITs are expected to benefit investors though a combination of appreciation and dividends, according to a recent paper that is part of BNY Mellon Asset Management’s global outlook for 2011. In addition to Asia-Pacific, it notes the REIT markets in Canada, Australia and South America appear particularly attractive because they offer a mix of higher-yielding and higher-growth assets, as the economies in those regions benefit from commodities exports.
While Urdang expects overall returns for REITs to diverge in different markets, the report notes that in most markets, real estate fundamentals are improving as apartment occupancies rise and office property rates increase in the largest urban centers.
“Overall, we see REITs as well capitalized and gaining favor as a vehicle for cross-border real estate ownership,” says Todd Briddell, president and chief investment officer for Urdang Capital Management. “REITs are attractive to investors seeking reasonable yields, and we expect that to continue until rates on savings deposits increase.”
He adds that REITs have been successful in raising capital in 2010 and are well positioned to make property acquisitions, which will further fuel growth, providing them with an advantage over other types of real estate investments.
On the US market, the report notes that challenges to the economy are likely to shape investor sentiment. The real estate investment firm also expects slower growth and slight rent appreciation in continental Europe, the UK and Japan.