Other segments on the continent seeing rental growth are Stockholm offices and destination shopping centres in strong locations. These destination shopping centres continue to see steady growth as they effectively win market share from the less attractive mid-sized centres, where neither the retailer nor consumer wants to be. Active management is key in creating these centres to become an experience for the consumer and the management teams of our largest holdings in this segment are proving successful at doing this.
The credit crisis induced lack of supply suggests a healthy current outlook to real estate. Nonetheless, there are many global issues that remain unresolved, including the eventual withdrawal of Quantitative Easing. Therefore real estate securities will likely experience periods of high volatility ahead, as seen most recently with the escalation of the Greek crisis. As such, it should be re-iterated that the real estate securities sector will not offer the short term diversification from equities as offered by direct real estate funds. However, an improving rental market is a highly attractive dynamic in real estate and the quoted real estate sector is well positioned to benefit from this over the medium term. That is why positive rental outlook is the key fundamental we are searching for in our holdings.
