Globally, real estate continues to offer attractive value relative to the bond market with lower volatility in contrast with the equity market. Despite concerns that real estate values increased too quickly or capitalization (cap) rates fell too much, initial yield spreads are wide compared to government bonds and real estate capital values remain well below their peak levels. At the same time, public debt-to-GDP ratios are elevated and countries struggle to build economic momentum. In this environment, we recommend investors target urban areas and property sectors which not only provide greater certainty of income to protect against downside risks, but also provide an opportunity to capture higher net operating income as economic growth improves over the next several years.
Source : RREEF Real Estate