If the government wants to change the nature of the private rental market, it needs to create the incentivesby Andy Davis / December 14, 2016 / Leave a comment
Published in January 2017 issue of Prospect Magazine
One of the biggest trends among institutional investors in recent years has been their increasing appetite for “real assets,” meaning investments such as offices, shops, warehouses and distribution centres, as well as infrastructure (roads, hospitals, schools, airports, power grids, and so on) and to a much lesser extent residential property.
The explanation is simple. The income institutions can earn from traditional investments such as corporate and government bonds has dwindled almost to nothing, and most bonds are now so expensive that there is little prospect of prices going up much. Investments such as commercial property and infrastructure, on the other hand, have relatively strong yields that can be sustained (thanks to rent increases, for example) and they retain some scope for capital gains, making them more appetising than another helping of over-priced bonds.