Accessing the Global Property Market

A selection of funds and ETFs that will help you gain exposure to the global property market

Simon Molica 12 October, 2012 | 11:22AM
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Pros and Cons for Listed Property Equities

There are many benefits to seeking property exposure indirectly through listed property equities. Potentially the most important is the liquidity factor: being able to gain exposure to underlying property assets which can be traded daily through the global stock markets. There is also the added incentive of transparency from stock market regulation and another interesting point is the ability to gain exposure to high quality management teams who are incentivised to provide strong long-term returns. In addition, accessing a variety of regions and shifting between regions in a timely manner is possible in global property securities, allowing fund managers to switch between regions/countries which are experiencing stronger economic phases.

On the downside, in the short-term these securities tend to act more like equities, resulting in higher volatility than investing in property directly. Development risk and leverage are also issues that investors should be mindful of. High levels of leverage became evident to investors during the credit crunch with the collapse of several high profile listed property companies.

The Growth of REITs

Over the last decade the listed global property market has developed significantly, with the introduction or modification of legislation across the globe to allow real estate investment trusts (REITs) to exist in many regions rather than a mere handful, such as the US and Australia where they were originally borne out of. The UK’s first REITs were converted in early 2007.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Simon Molica

Simon Molica  is a portfolio manager for Morningstar Investment Management

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