DWS Remains Constructive on U.S. Real Estate
February 25 2019 - 9:33AM
Business Wire
- Firm releases 2019 strategic market
outlook report for U.S. real estate
- Report examines various factors
creating headwinds and tailwinds across sectors
DWS Group today released its U.S. Real Estate Strategic Outlook
for 2019. In the report, DWS notes that continued economic growth
and a moderate pipeline of new supply will be key drivers of the
market in the short term. Rising interest rates and a flattening
yield curve make the medium-term outlook more uncertain.
“The underlying fundamentals of the real estate market remain
healthy. Therefore, our view is it is too early to batten down the
hatches, shunning growth oriented sectors, markets, and assets that
can thrive amid strong fundamentals,” said Todd Henderson, Head of
Real Estate for the Americas at DWS. “However, we acknowledge we
are late in the economic cycle and are managing risk across the
portfolio accordingly.”
The report also includes a breakdown of DWS’s sector allocation,
as well as various factors impacting the outlook and strategy on
each, such as:
- Industrials (Overweight): Market
fundamentals in the U.S. are expected to remain strong for the next
two years due to several factors including low current vacancy
rates, a disciplined construction pipeline and the proliferation of
e-commerce.
- Apartments (Market-weight):
Favorable macro trends should sustain healthy renter demand.
Combined with the signs that the supply pipeline is abating, the
apartment sector should return to positive net operating income
growth. It is unlikely that absorption can offset the sizeable
pipeline of new supply.
- Retail (Underweight): Though the
sector remains under duress due to the boon in e-commerce, it’s
kept a float by strong consumer fundamentals and service-oriented
retailing. Going forward however, economic fundamentals that
underpin consumer spending may not be as favorable and could put
pressure on discretionary spending.
- Offices (Underweight):
Performance is expected to continue with modest growth, though the
high cap-ex burden, a trend toward densification, and persistently
low cap rates create risk and return imbalances.
“In a mature phase of the cycle, we are adopting sector
allocations with a keener eye toward risk. As we continue to
monitor various trends and developments impacting the markets,
we’re constantly analyzing our exposure to certain sectors to
ensure we’re minimizing risks while generating the best returns for
investors,” Henderson said.
DWS Group
DWS Group (DWS) is one of the world's leading asset managers
with USD 757.9bn of assets under management (as of 31 December
2018). Building on more than 60 years of experience and a
reputation for excellence in Germany and across Europe, DWS has
come to be recognized by clients globally as a trusted source for
integrated investment solutions, stability and innovation across a
full spectrum of investment disciplines.
We offer individuals and institutions access to our strong
investment capabilities across all major asset classes and
solutions aligned to growth trends. Our diverse expertise in
Active, Passive and Alternatives asset management – as well as our
deep environmental, social and governance focus – complement each
other when creating targeted solutions for our clients. Our
expertise and on-the-ground-knowledge of our economists, research
analysts and investment professionals are brought together in one
consistent global CIO View, which guides our strategic investment
approach.
DWS wants to innovate and shape the future of investing: with
approximately 3,600 employees in offices all over the world, we are
local while being one global team.
For informational purposes only, not a recommendation or
endorsement of a specific security.
The brand DWS represents DWS Groups GmbH & Co. KGaA and any
of its subsidiaries such as DWS Distributors, Inc. which offers
investment products or DWS Investment Management Americas Inc. and
RREEF Americas L.L.C. which offer advisory services.
All investments involve risk, including the potential loss of
principal.
© 2019 DWS Group GmbH & Co. KGaA. All rights reserved.
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version on businesswire.com: https://www.businesswire.com/news/home/20190225005621/en/
For the full copy of the U.S. Real Estate Strategic Outlook and
further information, please contact:Oksana PoltavetsDWS Group Media
RelationsPhone: +1 (212) 250-0072E-Mail:
oksana.poltavets@dws.com
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