The firm, which has announced that it will remain overweight in the asset class anyway, believes dividend yields in real estate are attractive versus bond yields, and are above those in equity markets.
It also said a buffer of extra yield from listed real estate has built up, mitigating rising returns from corporate bonds. Figures from FE Analytics show that in the 12 months to February 2013 listed real estate returns exceeded 11%.
Real estate, a highly leveraged asset class, has enjoyed relatively strong performance following long term re-financing options announced in December 2011 and February 2012 and low interest rates.
Treading carefully
Cautious optimism is the theme elsewhere, as analysts suggest that the sector can expect mixed fortunes over the coming 12 months.
The Deloitte 2013 Real Estate Predictions report, stated that international demand for UK property will continue apace, and could lead to an increase in joint venture vehicles for domestic funds. It also predicted that development opportunities wouldl attract more interest from foreign investors looking to invest either directly, or alongside UK developers or funds.
However, the report warned that while it expects to see an increase in real estate valuations in 2013, recovery could be derailed as the economic outlook remains subdued.
