Property can be an important source of diversification within a multi-asset portfolio. In today’s “lower for longer” interest-rate environment, it is one of few asset classes that still offers opportunities for significant yield, as well as the potential for growth.
There are many property sectors in which to invest worldwide – from traditional offices and retail to the emerging healthcare and data centers. There are also multiple ways to access this asset class, spanning debt to equity, core to opportunistic and commingled funds to joint ventures. That’s a lot of information to cut through.
Selecting the appropriate markets and sectors, as well as the most attractive access points, can present unique challenges. But partnering with an experienced team helps you stay sharp and identify attractive opportunities.
We have a deep understanding of property markets, having invested across the globe and through a number of cycles over the past 20 years. This allows us to identify interesting strategies early and manage the associated risks effectively. During this time, we have built a global relationship network that allows us to quickly match the best-in-class property fund managers with the most attractive strategies to capitalize on opportunities as they arise. We also are experienced in secondaries, clubs and joint ventures.
Our Property Multi-Manager team based in Philadelphia, London, Stockholm and Singapore enables us to source and structure opportunities effectively and underwrite investments rigorously. In our view, an active management approach like ours is necessary for today’s increasingly complex investment environment.
Aberdeen’s global pricing indicator across global core markets
Source: Aberdeen Asset Management, Q2 2016. Aberdeen’s global pricing indicator compares the market values of properties to their fundamental values in order to determine if a property market is over- or under-valued, on average.
We calculate our long term leading indicator for over 70 country / sector combinations globally. The indicator does not translate into a short-term market forecast because momentum and investor sentiment can lead to marked and prolonged periods of over- or under-pricing. Our pricing calculations only indicate how stretched prices are relative to fundamentals. Prices do not need to fall or rise for our indicator to reach a neutral position. A change in income growth expectations or in the risk-free interest rate, can also lead to such adjustment, or indeed a combination of all three. We use the indicator to establish risk tolerance at a very broad level. We use similar methods at a more granular level to establish the risk tolerance for the mandates we run.