Managing risk in global property (2)

What's happened in global investment markets? (1)


When the US sharemarket fell by around 10% in late February 2007, investors around the world were on the alert.

The immediate cause of the correction related to concerns that Chinese growth rates may need restraining via a coordinated global tightening in monetary policy.

The issue subsided shortly after and most markets swiftly recovered.

Listed property, however, continued to experience falls, underperforming the broader share market.

To understand why this has happened, it is first necessary to look back over the last few years.

One of the drivers of the outstanding performance of global listed property in the last five years has been the returns from the underlying properties themselves.

Property yields (cap rates) have fallen consistently in many markets to record lows.



Source: AMP Capital Investors, Australia