Positive risk premiums
One of the decisive developments in the investment world following the global financial crisis is the low level of interest rates. Due to low interest rates assets have a positive valuation.
Investment opportunities despite higher interest rates
It is true that real estate prices have risen since the global financial crisis. However, the differences between countries manifest themselves, not in prices, but in the varied development of interest rates. While the U.S. central bank, the Fed, reversed interest rates in December 2015, rates in the Eurozone and Switzerland remain at a low level. Nevertheless, even the U.S. real estate market still offers intact investment opportunities, due to the good situation in the U.S. economy.
Stable economic situation offers opportunities
Market diversity between countries
A Swiss pension fund can cover around half of the global market with investments in the institutional real estate markets of the U.S., Great Britain and Germany (see figure A). If it takes other real estate markets in Europe and Asia into account, the figure reaches 90 percent. The individual countries have different economic cycles. While rents are increasing in Europe, for example, due to the limited offer, they are growing in the U.S. due to growth in economic centers – and it is this heterogeneity that creates diversification potential.
Low correlation between markets
Various growth cycles in sectors
Sweet spot in core real estate in particular
Robust with Core/Core Plus real estate
Transparent real estate markets
Local connections decisive
Don't wait to buy real estate, buy real estate and wait.
T. Harv Eker, Canadian author and entrepreneur