Good Investment Pickings on quality stock

Posted On Tuesday, 19 February 2013 12:51 Published by eProp Commercial Property News
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Despite the persistent weak economic outlook in the UK and Europe, investment market activity was stronger in the last quarter of 2012 with better quality assets receiving strong interest from the investment market.  

Michael WattersMike Watters, Managing Director of Redefine International, says rising inflation and the end of accommodative interest rate policies are two significant factors about to bear down on the developed world's investment markets in 2013.

The big question is how this will impact the global property market. Watters believes property will be hit by both forces. "On the one hand rising inflation should raise rental levels increasing the value of the investment and on the other, rising interest rates will effect property's capitalisation rates and reduce after interest income, causing the value of the investment to fall."

For property investors like Redefine, it will be important to take advantage of this trend by fixing long term debt over the property portfolio. "This will have the impact of limiting the negative cash flow effects and will have an inverse effect on valuation. The interest rate hedge will increase in value as the capital value of the property declines," says Watters.

Watters believes 2013 could indeed be the buying opportunity of the century citing a number of different factors. Firstly with real estate still recovering from the global financial crisis of the late noughties, it still can be acquired below its long term normalised value. Interest rates are also at an all-time low but Watters believes this won't be for long so buying and fixing debt long term will allow economic cyclical forces to work in one's favour.

Watters does concede, however, that it is still very difficult to secure long term financing from Banks for anything but the right deals. "Savvy investors should take advantage of this window and back those management teams with the skills to take advantage of this tipping point in history," he concludes.

 

Last modified on Friday, 18 April 2014 12:45

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