Managing risk in global property (4)

How will this affect property?(1)


The combined impact of these issues has clearly had a significant effect on market sentiment.

However, there are also some direct implications for property markets:


REITs


‧ REITs are typically relatively conservatively geared at around 40% to 50%.

Most of their borrowings are for fixed terms (around five and a half years for US REITs) so, in the short term, they are reasonably immune to global credit markets.

However, in the medium term, the rising cost of debt will almost certainly impact their bottom lines.


Source: AMP Capital Investors, Australia