Real estate around the world is in an upswing, presenting a golden
opportunity for Canadian investors to diversify away the risk of being
overly exposed to their home market, said Richard Johnson, Managing
Director of UBS Global Asset Management today.
Mr. Johnson was among a number of leading investors quoted in today’s
Globe and Mail Report on Business article Real estate’s next
worry: commercial property that explores the risks associated
with Canada having one of the hottest commercial real estate markets in
the world. Canadian commercial real estate has delivered a 10-year
annualized total return of 11.9% according to Investment Property
Databank. That’s the highest of all developed markets covered by IPD,
and second only to South Africa in that time period.
“With most Canadian institutional real estate investment focused on
domestic real estate, pension funds could be seriously overexposed in
the event of a downdraft in the market,” said Mr. Johnson.
“At the same time, we are expecting attractive returns over the
intermediate term in some markets in Europe and Asia, so this is an
excellent time to think about diversification and look at opportunities
in those markets,” he said.
UBS Global Asset Management Real Estate Research & Strategy is
forecasting positive intermediate-term results centered on 6% total
return for the Canadian market. William Hughes, Global Head of the
Group, suggests that near-term performance will be more impacted by
perception and pricing than fundamental changes; the timing of which is
very difficult to predict.
"Canadian commercial real estate has enjoyed the status of safe haven,
attracting new investment capital and driving down yield. If capital
becomes less risk averse and seeks higher yield, commercial real estate
values may be affected" says Hughes. Investors can observe changes in
market supply and demand but perception may change quickly or may not
change at all.
Given the recent universal success of commercial real estate markets
across Canada, diversification could be sought through investment
outside the country. “UBS Global Asset Management is starting to see
improvement in some of the markets that were hurt during the global
financial crisis. Growing confidence and increasing yield desire may
lead investors to diversify their domestic exposure,” said Mr. Hughes.
About UBS Global Asset Management
UBS Global Asset Management is a large-scale asset manager with
businesses diversified across regions, capabilities and distribution
channels. It offers investment capabilities and styles across all major
traditional and alternative asset classes including equities, fixed
income, currencies, hedge funds, real estate, infrastructure and private
equity that can also be combined into multi-asset strategies. The fund
services unit provides professional services including fund set-up,
accounting and reporting for both traditional investment funds and
alternative funds.
About UBS
UBS draws on its 150-year heritage to serve private, institutional and
corporate clients worldwide, as well as retail clients in Switzerland.
Its business strategy is centered on its pre-eminent global wealth
management businesses and its leading universal bank in Switzerland.
Together with a client-focused Investment Bank and a strong,
well-diversified Global Asset Management business, UBS will expand its
premier wealth management franchise and drive further growth across the
Group.
UBS is present in all major financial centers worldwide. It has offices
in more than 50 countries, with about 35% of its employees working in
the Americas, 36% in Switzerland, 17% in the rest of Europe, the Middle
East and Africa and 12% in Asia Pacific. UBS employs about 60,000 people
around the world. Its shares are listed on the SIX Swiss Exchange and
the New York Stock Exchange (NYSE).
www.ubs.com/media
Copyright Business Wire 2014