Marcus Phayre-Mudge, head of property equities at F&C, remains as bullish as he was last year on the outlook for real estate equities, particularly as assets step off the travelator of yield compression and stepping onto one of rental growth.
Speaking to Portfolio Adviser during the PA Summer Congress 2015, Phayre-Mudge said the likely impact of a turn in the interest rate cycle is central to the firm’s thinking over the short and medium term.
“If you look back over previous cycles, rising rates are not necessarily a bad thing for real estate, as long as rates are rising for the right reasons – i.e., central banks are attempting to control the rate of growth in an economy. In that scenario, as long as the supply of the assets you are looking at is being contained, then the improvement in GDP growth translates quite quickly into rental growth.”
“The key point is, while it is not beneficial for fixed income, will be for real estate, as long as you pick your markets correctly.
