Global property returns disappoint

The European and Asian teams of most global property securities funds are under-resourced, according to the latest Global Property Securities Fund Sector Review conducted by ratings house Lonsec.

However, the review found that most of the managers surveyed acknowledged the fact and were focusing on developing their capabilities in the European and Asian regions.

The Lonsec analysis said appropriately resourced investment teams were important in Europe and Asia because these regions encapsulated many countries with dramatically different cultures, languages, laws and investment markets.

“The resultant difficulties in researching these markets are often compounded by poor company transparency and disclosure,” it said.

The Lonsec analysis also pointed to the declining returns in the sector saying that after a prolonged period of strong returns, the global property sector had delivered investors a disappointing return of minus 16.9 per cent in calendar 2007.

It said the catalyst for this had been the credit crisis in mid-2007, which had eventually affected stock markets throughout the world.

Lonsec cautioned that there might be further volatility and pricing pressure in 2008, but said it believed that over the longer-term the global real estate sector would continue to deliver attractive risk-adjusted returns.

Four funds reviewed by Lonsec attained its top (highly recommended) rating. They were EQT SGH LaSalle Global Listed Property Securities Fund, ING Wholesale Global Property Securities Fund, Perennial Global Property Securities Fund and RREEF Global Property Securities Fund.