You are here: Home - Saving & Banking - News -

US real estate volatile but still good value

Written by:

US-based Real Estate Investment Trusts (REITs) may see further share price volatility, but a deep correction is unlikely, according to ABN AMRO Asset Management.
Joe Pavnica, Chicago-based global property securities portfolio manager at ABN AMRO, said pricing would remain volatile in the sector, but predicted an annualised total rate of return of 5 to 10% over the next year. He disagreed with commentators who have claimed the US REIT market is overvalued by at least 20%.

Shares in US REITs have fallen sharply since February, affected by the deepening crisis in the US sub-prime mortgage industry and the US housing market. After a brief recovery in September, prices proved unsustainable and fell again leaving the segment down by almost 12% so far this year. At the depth of the market aversion to REITs in mid-August, they had been down by more than 15%.

Pavnica added: “The fallout from the US housing market and credit crunch have undoubtedly affected property yields and valuations and more negative news is likely from US financial institutions. However, the market has over-shot on the downside and we see opportunities.”

Solid supply and demand fundamentals and strong earnings growth are further reasons to be upbeat about US REITs, according to Pavnica. “Many investment institutions remain fundamentally underweight in the asset class, which means that demand for real estate securities from this group of investors should stay strong and put a floor under share prices,” he said.


Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
Investors go green

The upsurge of oil prices to more than $90 a barrel has focused investor interest on alternative power generation technology,...