Buoyant outlook on returns in real estate

PUBLISHED : Friday, 25 February, 2011, 12:00am
UPDATED : Friday, 25 February, 2011, 12:00am

Real estate investors are expected to receive attractive returns this year from leasing and development projects in emerging markets including the mainland, according to a global property investor.

LaSalle Investment Management, a member of the Jones Lang LaSalle group, released its 2011 investment strategy report yesterday and forecast that deals in the global real estate market will continue to pick up.

It said the global economic outlook had improved in the past two months. But the economic recovery was likely to be long and slow in the euro zone, Japan, Britain and the United States.

At the same time, there will be much higher levels of leasing demand in large developing markets such as China, India and Brazil.

'In the low-growth countries, we expect investment performance will get a boost from low interest rates and a rising flow of debt and equity capital despite the weak recovery,' said Jacques Gordon, global strategist of the Chicago-based company.

'Investment performance in the rapidly growing countries will be volatile due to the waves of liquidity that wash over less mature markets.'

The Asia-Pacific will provide some of the best opportunities for real estate development and leasing while edge-of-core properties will be attractive in Britain, France and the US. Investors should also take advantage of financial distress in Japan, Mexico, the US, Britain and Germany, the report said.

On the China market, LaSalle said developing high-quality office buildings in good locations in second-tier cities would be the best bet. In addition, retail assets in first-tier and advanced second-tier cities as well as logistics warehouses in transport hubs were recommended.

It suggested that people be prudent about investing in luxury residential blocks, untested new residential projects and low-to-mid-end hotels in decentralised locations.

Catherine Chen, associate director of the firm, said the recent purchasing restrictions imposed by Beijing on urban residential markets would directly affect the sector.