Aberdeen says investment managers will no longer be able to rely on rising property prices across the market to generate the bulk of their returns. Instead the market environment will favour active managers that employ a disciplined process and are far more selective when investing in property from both a regional and sector basis.
Furthermore, Aberdeen claims that the ability of managers to drive up the rental value of their holdings will be key in generating future returns.
From a regional perspective, Aberdeen continues to favour the Nordic region where GDP growth forecasts for 2007-11 continue to be amongst the highest in Europe.
The team says they also believes there are exciting opportunities in eastern European countries which are enjoying strong levels of economic growth.
Aberdeen Property Investors head of investment strategy Alessandro Bronda says: “The subprime lending crisis has increased the risk of global growth slowing. However, there continues to be a significant amount of liquidity targeting real estate exposure and a lack of suitable product. The end of the yield compression will mean that active management capabilities such as those of Aberdeen will become more important.”