Global Public Equity – Quarterly Review

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While the global pandemic is still with us, economic recovery from it continued during the third quarter. However, there is still has a long way to go, and this was reflected in only modestly positive returns for property stocks.

Within real estate, while certain sectors, such as hotels, are seeing only temporary impacts from the pandemic, we have also seen an acceleration of trends that were in place prior to COVID-19. Among these trends that impact real estate are working from home as it relates to office demand, the growth in e-commerce affecting both retail and logistics demand, and growth in the internet as a driver of data centers.

Once COVID-19 passes as a public health risk, real estate will see a resumption of demand supported by massive stimulus

Swift and decisive actions by central banks around the globe have helped capital markets function properly in a way not normally seen during a recession. Property stocks remain well off their highs, but companies have shown an ability to tap the equity and debt markets for capital.

Global rates are expected to remain low, potentially for years to come based on guidance by central banks, and this should be supportive for real estate in general as demand recovers.

FTSE EPRA/NAREIT DEVELOPED RETURNS IN USD AS OF 9/30/20

 

Outlook

While we know the global economy is reopening, the threat of COVID-19 has not yet passed. The pandemic will eventually pass, but timing for this is unclear. However, we are seeing some longer-term trends accelerate, including the threat of e-commerce to retail and the resulting benefit to logistics. Overall, once COVID-19 passes as a public health risk and economic activity resumes, the commercial real estate market will also see a resumption of demand supported by massive monetary and fiscal stimulus programs around the globe.

 

Disclosures
  • Past performance is no guarantee of future results.
  • The views and opinions in the preceding Commentary are as of the date of publication and are subject to change.
  • There is no guarantee that any market forecast set forth in this presentation will be realized.
  • This material should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment.
  • Commentary not to be re-distributed without permission.
  • NASDAQ is a broad based capitalization index-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The Dow Jones Industrial Average is the measure of the performance of 30 “blue-chip” stocks, considered the leaders of the market. The S&P 500 Index is an unmanaged index generally considered to be representative of the large cap segment of the market. The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 11% of the Russell 3000 total market capitalization. The Dow Jones Utility is price-weighted average of 15 utility companies that are listed on NYSE and involved in production if electrical energy. The MSCI World Index is free-float weighted equity index which include developed world markets. The FTSE EPRA/NAREIT (Europe Public Real Estate Association/National Association of Real Estate Investment Trusts) Index is a total return performance index of all equity REITs tracked by FTSE EPRA/NAREIT. The Indices are presented for illustrative purposes only and are not intended to imply Heitman’s past or future performance. The performance of the Indices assumes dividend reinvestment, but do not reflect transaction costs, advisory fees, custodian fees, trading costs and other costs of investment. Individuals cannot directly invest in any of the Indices described above.