The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
The firm is adding a portfolio of pooled property investments, similar to real-estate investment trusts - these will be managed by LaSalle Investment Management, the investment arm of Jones Lang LaSalle, the property developer. LaSalle is primarily an institutional asset manager and this is its first platform to target Asian retail customers. This is also the first alternative investment that ipac has added to its mix of underlying fund managers.
ipac is a unit of Axa Group.
Philip Levinson, Singapore-based director of regional client services at LaSalle, says real-estate securities offer retail investors the best way to access global property opportunities. Although people can own property directly, this becomes a challenge in sectors such as commercial real estate; and real-estate funds can be expensive and closed to retail investors.
A multi-manager such as ipac can offer retail investors access to institutional money managers at reasonable fee levels, says Carolyn Russell, manager of investment services for Asia at ipac in Sydney. She adds the firm combines its multi-manager offering as part of its wealth management services.
Property offers investors low correlations to traditional asset classes such as global equities and global fixed income, and has consistently outperformed them over the past 15 years, she adds. That low correlation makes real estate a good hedge against declines in other securities markets.
Levinson argues that despite rising interest rates, property remains an attractive asset class that should continue to outperform global equities and global bonds, with global average returns of 4.5-5.0% with high dividends. Global REITs can on average continue to yield 8-10%, he adds.
Deregulation in markets such as Australia and lately Japan, Singapore and Hong Kong have allowed more properties to be securitised, a trend that has allowed yields to rise on these assets. Similar deregulation is slated for markets such as the United Kingdom and Spain, as well as other Asian jurisdictions.
Beyond deregulation the market of securitised property should grow. The direct property market worldwide is worth $14.6 trillion, while the indirect market is only $729 billion, Levinson says. The indirect market has plenty of room to grow. Moreover, most of this market is still in the United States, but should evolve to reflect the global direct market, with more opportunities to invest in European and Asian properties on the horizon.
Although rising interest rates in the US, for example, are likely to hurt a vulnerable housing market, Levinson says that institutional investors donÆt use leverage to buy property. Therefore the majority of the global property market wonÆt be affected by downturns in certain residential areas.
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