URDANG, the real estate investment manager and part of BNY Mellon Asset Management, has said that the Asia Pacific region is leading the global recovery for real estate investment trusts (REITs) due the rapid growth of the economies in China, Hong Kong and Singapore.
Strong-performing REITs are expected to benefit investors though a combination of appreciation and dividends, according to the report.
In addition to Asia Pacific, the report notes the REIT markets in Canada, Australia and South America appear particularly attractive because they offer a mix of higher-yielding and higher-growth assets, as the economies in those regions benefit from commodities exports.
While URDANG expects overall returns for REITs to diverge in different markets, the report notes that in most markets real estate fundamentals are improving as apartment occupancies rise and office property rates increase in the largest urban centers.
Urdang Capital Management president and chief investment officer Todd Briddell said overall, Urdang sees REITs as well capitalized and gaining favor as a vehicle for cross-border real estate ownership.
"REITs are attractive to investors seeking reasonable yields, and we expect that to continue until rates on savings deposits increase.
"REITs have been successful in raising capital in 2010 and are well positioned to make property acquisitions, which will further fuel growth, providing them with an advantage over other types of real estate investments," Briddell added.
With regard to the US market, the URDANG report notes that challenges to the economy are likely to shape investor sentiment. URDANG also expects slower growth and little rent appreciation in continental Europe, the UK and Japan.
URDANG’s views were reported in a recent paper that is part of BNY Mellon Asset Management’s global outlook for 2011.