Invest in malls, office and housing for better returns

Multi-family housing is also a safe bet, according to Australian firm

PUBLISHED : Wednesday, 05 December, 2012, 12:00am
UPDATED : Wednesday, 05 December, 2012, 4:15am

Global mall operators, Italian office property groups and owners of multi-family housing in the US are among the best property investments, according to Australian investment group AMP Capital Investors.

Higher-quality mall operators including Westfield Group, Unibail-Rodamco and Simon Property Group will fare best in an environment of sluggish consumer confidence, said Matthew Hoult, head of global listed real estate at AMP Capital. Values of southern European office owners including Beni Stabili in Italy are "attractive", while groups like AvalonBay Communities will benefit from a recovery in the US housing market, he said.

"Very high quality retail malls are substantially taking market share off their lower-quality peers as consumers try to make their dollars go further in the form of entertainment or lifestyle destinations at the same time," Hoult, who helps manage US$5.2 billion of listed property securities, said in a telephone interview. In Europe "a lot of people mistake what looks like a sovereign crisis for a corporate crisis and that's not the case".

In the US, multi-family housing groups are benefiting from "a slow but steady turnaround" in residential demand, he said.

Rents of prime retail space in major cities around the globe rose in the three months to September 30 as retailers sought highly-trafficked locations, CBRE wrote in its third-quarter global retail preview report. Take- up of office space rose 15 per cent in Milan in the third quarter, while supply of high-quality space remained limited in Rome, the broker said.

In the US, apartment landlord AvalonBay gained access to markets where developments are difficult and rents are rising with its joint purchase of Lehman Brothers' Archstone unit last month.

AMP Capital is also considering introducing property funds with long-short capabilities, which would allow it to bet on both rising and falling stocks, Hoult said.

"Increasingly, people are looking at property as much more mainstream because the economic environment lends itself to property exposure," he said. "And where we can juice up the return of what's a really attractive asset class to begin with, there's a demand for it."

AMP Capital's global securities fund, which invests in as many as 85 property companies around the world, delivered a total return of 24 per cent from January to October 31, according to AMP.