With very low interest rates, real estate is in a sweet spot. Investors’ search for yields continues and has intensified with the latest fall in interest rates. This intensity is being felt in real estate pricing, however. Yields have been compressing for years and favourable yield gaps will swiftly turn into reasonable or unfavourable pricing. We therefore expect rental growth to drive returns for the forthcoming years. With this in mind, the selection of (sub)markets and assets becomes more critical: which investment has strong enough fundamentals to endure economic headwinds?
In the remainder of this article we will explain our approach to ensuring perpetual value.
Our approach: Market ID
In our acquisition and hold-sell processes, we use two state-of-the-art tools to assign a market ID to every asset of interest and every asset in our portfolio. We differentiate between market and asset tooling.