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Global property revival
Thursday, 2 April 2009 12:40pm
By Ruth Liew  |  In Investment

Local investors are dipping their toes back into property market but are opting for well-diversified global property trusts instead of concentrated A-REITs.

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According to Mick O'Brien, chief executive of Invesco Australia, the firm continues to receive inflows into its Invesco Wholesale Global Property Securities Fund in the past six months despite the battering that hit the sector.

Money is now starting to flow in more substantially into Invesco's existing mandates, he said.

Placing his faith in the global real estate investment trust arena, O'Brien believes that both retail and institutional investors will start viewing G-REITs as the stronger sector to provide diversity and higher returns.

"What we've seen over the last three years is [super funds] increasingly transitioning their AREIT exposure cross to global REITs.

"Some of them have the approach of a 50/50 position, some to 70/30 and some up to 100 per cent into global REITs. They just include Australian securities in that [100 per cent] global mandate," said O'Brien.

Investors being burnt by the A-REIT plummet last year can not only attribute their pain to high gearing levels but the lack of diversity and stapled securities of many funds. In turn, G-REITs are able to give investors a better diversification base with exposure to markets in Europe, emerging markets and the US, for instance said Mark Blackburn managing director and portfolio manager, Invesco Real Estate Securities team.

As for which stocks represent the best value for investors at the moment, Blackburn advises there are opportunities in all corners of the globe as property price corrections start to fall in place.

Now the ball is in the investor court - it's up to both retail and insto investors to take further steps in cashing in on the discounts.

"There's opportunity for value everywhere. The issue we're facing today is not a real estate problem - it's a capital markets and economic problem."

"There's discounts all across the globe, but the issue of realising that discount is not a real estate dymanic, it's a macroeconomic and capital markets dynamic that has to improve before we can represent that real estate is migrating towards that intrinsic opportunity," said Blackburn.

The Invesco wholesale property securities fund's top three country exposures are the US (52 per cent), France (9.9 per cent) and Japan (9.7 per cent).

But like many of its global listed property fund manager counterparts, the firm posted hefty double digit losses last year at 55.8 per cent, against the benchmark's 58.3 per cent.

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