Property fund managers highlight sector ‘uncertainty’
Equity funds focused on property sector rebound in 2012, but managers raise concern over lack of visibility.
Despite data showing a strong performance bounce in the first half of 2012 compared to the past two years, global property equity fund managers remain ‘uncertain’ over future prospects due to a faltering US recovery and questions over future growth in China.
Global property equity funds saw a sharp rebound in the first half of 2012, up 12.6 per cent in the first six months of the year compared to a 7.8 per cent decline in 2011 and a fall of 10.5 per cent in 2010, S&P Capital IQ fund research has revealed.
Global real estate indices notched up positive returns in both the first and second quarters of the year, one of the few major sectors to do so according to the report. The resilience in the second quarter was principally propelled by developed Asia and especially China.
However, there was a general consensus among global property equity managers that the outlook for the sector is very uncertain. The key factors remain the pace of the US recovery across all sectors and growth in China, S&P Capital IQ said.
The report does state, though, that managers highlighted the US housing market is showing signs of recovery, with fewer distressed sales, tighter supply and declining mortgage rates.
The search for yield has rendered prime real estate attractive in countries such as Germany, the UK and the Nordic areas, particularly relative to other asset classes, such as government bonds, it added.