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While both economic and property market fundamentals are playing out largely as forecast in our 2013 U.S. Real Estate Strategic Outlook, in this mid-year update we nonetheless offer several modifications to our investment strategy. In particular, we have indicated in our last few updates that our forecasts reflected rising interest rates. The Fed’s pronouncements in May were a reminder that, with the passage of time, the economy is becoming healthier and that capital markets will revert to their mean, implying higher interest rates. Against this back-drop, we recommend investors give greater preference for assets, markets and sectors that offer greater potential for income growth to offset capital value risks. Moreover, our property sector allocation recommendation maintains a strong overweight to industrial, with a slightly greater weight to office at the expense of retail, with apartments essentially unchanged.
Source : Deutsche Asset & Wealth Management
