The establishment of Real Estate Investment Trusts (Reits) has led to a significant increase in inve...
The establishment of Real Estate Investment Trusts (Reits) has led to a significant increase in investment globally in the cross-border commercial property market, according to a survey by DTZ Research.
The research showed one of the preferred ways of investing in the cross-border commercial property market was through Reits, especially from North American and Asia Pacific investors. It showed this trend is likely to continue as more countries establish Reits. For example, Hong Kong, Singapore and Thailand have just passed Reits legislation with Taiwan and Malaysia expected to follow suit in a short period of time.
Paul Williams, head of investment consulting at DTZ, said: "Growing recognition of the benefit of real estate as an asset class, improvements in the quality and availability of information on real estate and the continued development of new investment vehicles for foreign real estate, mean we can expect investor appetite for cross-border real estate to continue to grow."
Williams warns investors seeking to take advantage of cross-border real estate transactions to take into account a number of issues in addition to the global economic outlook, such as the political risk and vehicle liquidity.
The research showed the average holding of foreign commercial property doubled from 20% in 2001 to around 40% in 2004. Results from the survey indicate that this trend is set to continue with over 50% of respondents planning to increase their holdings in cross-border real estate - less than 5% plan to reduce holdings. Europe is expected to be the centre of investment activity.
It is likely the expansion of the EU will add further opportunities for investors, although these are likely to be over the medium rather than short term, due to the size of most of the new entrants and their consequent lack of investment grade stock.
Partner Insight: Continuing the Architas education series for clients.
What made financial headlines over the weekend?
290,000 already affected
Putting the tech into protection
Square Mile’s series of informal interviews