Of the more conventional part of the property market, he says: “In common with other asset classes, higher bond yields and therefore valuations hit demand. I’m not sure anyone is particularly interested in owning offices with a 5 per cent rental yield right now, but if prices fall enough that it's a 12 per cent, then people will be interested."
Martin Towns, deputy head of real estate at M&G, says that while demand for the higher quality offices has rebounded more quickly, the proportion of workers returning to all offices has also been increasing, which he says will boost the investment case for the rest of the market.
The long view
Longer-term, Matthew Norris, head of real estate securities at Gravis, says there are several mega-trends that will determine property investment returns in future years.
He lists these as: “Ageing populations, digitalisation, urbanisation and generation rent.”
His view is that as people live longer, so will demand grow for doctor’s surgeries and care homes, so among the assets he owns are property companies that develop these.
Norris’ generation rent idea centres on the idea that people who are unable to buy a property to live in will instead rent premium apartments, and cites the example of student housing as an example of where this is already happening.
His digitalisation theme is around the rise of e-commerce, and the durability of this asset investment opportunity is something that appeals to Howard as well.
He says the relatively wealthier cohorts of society tend to do more online shopping, and as this group are more likely to be able to keep spending, it should mean demand in this part of the property market remains strong.
David Thorpe is investment editor of FTAdviser
