While inflation is “still somewhat elevated” in the US, a “reasonably stable” environment across most markets is good news for REITs and real estate, says Kehr to City & Country. “[They] tend to perform quite well because you do see positive rental growth come through.”
The last “golden era for REITs” — more than a decade of low interest rates after the end of the Global Financial Crisis (GFC) and before the outbreak of Covid-19 — will not return, says Joachim Kehr, Asia-Pacific head at CenterSquare Investment Management. But that is not necessarily a bad thing, and Kehr expects a different type of “golden era” may follow.
“Interest rates were so low they led to dislocation in other parts of the economy, and from a real estate point of view, you know, they led to a spike in valuations,” says Kehr, a former real estate securities analyst at BNP Paribas during the GFC who later joined Philadelphia-headquartered CenterSquare in 2011. “We’re not really shedding tears for that ultra-low interest rate environment; I think the environment we’re in now — or that we’re moving into — is a lot healthier.”
