Diversifiable. Sustainable. Reliable.
Real estate returns are supported by lease contracts which can generate a steady source of income. The quality of tenants and lease contract terms are essential performance factors.
Another feature of real estate affecting investment returns is the potential for capital appreciation.
Investment experts have shown that, over time, an investment strategy will produce the best risk-adjusted returns if it mirrors the diversity of the underlying economy. Portfolio strategists recommend that a multi-asset investment portfolio should represent the total spectrum of investment opportunities, which leads to a significant allocation for real estate. This can further be diversified by investing in different real estate markets.
Characteristics of Real Estate
- Low performance correlation with other asset classes
- Stability of income based on contractual lease payments
- Attractive return profiles
- Superior liquidity and transparency in selected markets including Canada
- Competitive nominal returns
- Hedge against inflation real estate is a physical asset that is stable over time, whereas monetary instruments lose value immediately as inflation rises)
- Geographic and product diversification
- Institutional scale market
