The global economic and business environment is expected to be favourable for global property companies over the next few quarters, according to LaSalle Investment Management (Securities) in its recent Quarterly Review and Outlook.
“The resilience of the world’s economy is an important factor in the strength of investment markets in most parts of the world today. With property fundamentals improving, public real estate company earnings growth remains on track for 2011, with strong growth continuing in 2012,” said Todd Canter, CEO at LaSalle Investment Management (Securities) Asia Pacific.
“We are beginning to see more mergers and acquisitions, with the best companies in a position to acquire and improve the operations of less able competitors.”
In this year’s first quarter review, global property stocks and the broad market posted robust returns despite considerable volatility in March. The UBS Global Investors Index of property stocks grew 4.5 percent, while the MSCI World Equity Index of broad-market stocks increased 3.7 percent.
Mr. Canter added, “We think that companies with a strong base of existing investment properties, and with the ability to improve the performance of these assets as well as accretively expand their holdings, are best positioned to outperform in the environment we foresee.”
Europe, North America and Australia all revealed positive regional results in the property stocks. However, property stocks in Asian regions declined, particularly in Japan after a very strong 2010 last quarter, and somewhat less in Singapore and Hong Kong.
US REITs increased 6.7 percent in the Q1, while property companies in Continental Europe gained 3.2 percent. Australian property stocks grew 3.5 percent, even with the broad Australian market.
Property stocks in Japan fell 6.2 percent in Q1, lagging the Japanese stock market. Hong Kong property companies declined 1.6 percent this quarter, while property stocks in Singapore slid 3.2 percent.
Although the Japan disasters became a significant concern in both economic and humanitarian terms, LaSalle believes that any impact on global economic growth rates will still be minimal.