Real estate returns in North America are expected to be lower in 2008 than in the past five or 10 years, but they should still beat 10-year U.S. Treasuries, according to LaSalle Investment Managements annual outlook for the global real estate markets.
It will be a tough year in the U.S. and United Kingdom and tough for value-added and development strategies, the report noted. However, LaSalle is bullish on Latin America, parts of Asia such as Japan and Singapore and other European countries including Germany and the Nordic countries. LaSalle officials recommend an investment strategy for North America with a tilt toward low-risk investments such as apartments, health-care facilities and senior and student housing, along with distressed sectors such as housing and commercial mortgage-backed securities to boost returns.
Europe should see solid returns next year, particularly the office sector. Global financial centers such as London and Frankfurt are in a position to absorb the shock of the spreading credit crunch, according to the report, and markets in Asia and Latin America are expected grow rapidly because of investor interest and a stable supply of debt.