Explore the world of real estate opportunities

Timbercreek’s Top Real Estate
Investment Opportunities for 2018

With a dedicated global team, Timbercreek traverses the globe to identify the trends that are shaping real estate investment opportunities around the world. How does mobile data usage create real estate investing opportunities? What about bricks-and-mortar retail shopping across the different continents—value or value trap? How is Japanese tourism impacting the hotel sector?

Scroll to see the leading trends that we believe will have a positive impact on global REITs in 2018.

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Timbercreek

United States

Technology changing the landscape

The proliferation of mobile usage, video consumption, cloud computing and internet traffic are driving significant increases in data consumption. All that data needs to be stored somewhere – and that somewhere is data centres. Demand for data centres is robust and driving market rents higher. Amazon, Google, Instagram, Uber, Facebook, Snapchat and others, some of which did not operate in earnest five years ago, are driving this growth.

DATA USAGE

Video

31%
growth rate
Click here Source: Cisco Visual Networking Index, Cisco
Global Cloud Index 2016, Digital Realty Trust.
DATA USAGE

Mobile

46%
growth rate
Click here Source: Cisco Visual Networking Index, Cisco
Global Cloud Index 2016, Digital Realty Trust.

United States

Brick & mortar retail survivors

Not all retail is created equal. High-quality retail centres in good locations remain critical to delivering goods, services and experiences to customers. There are tactical opportunities to buy the ‘winners’ at well below intrinsic value, specifically within necessity-based and experience-oriented retail.

Experience-oriented retail undervalued
Necessity-based retail will thrive
Notable recent acquisitions in U.S. retail include:
Brookfield Property Partners L.P. bid $40 bn USD for mall owner GGP Inc.
Represents 15-20% premium
Source: Cisco Visual Networking Index, Cisco
Global Cloud Index 2016, Digital Realty Trust.
Unibail-
Rodamco SE bid $25 bn USD for Westfield
Corp.
Represents 15-20% premium
Source: Cisco Visual Networking Index, Cisco
Global Cloud Index 2016, Digital Realty Trust.
An indication that there is still embedded value in retail.

Canada

Gentrification and urbanization

Large Canadian cities are experiencing a wave of gentrification driven by people’s desire to live, work, and play in walkable, urban environments. REITs that own office and retail assets with infill development opportunities in these cities will experience outsized net asset value growth.

Live, work and
play in the city
New opportunities found
in old neighbourhoods
Land value
appreciation
is a sign of
value creation.
Land value: 100% growth in 4 years Click here Source: MCAP Development Finance Group.

Continental Europe

Mispriced retail REITs

Recently underperforming European retail REITs – unjustly painted with the same negative brush as U.S. counterparts (Europe is relatively under-retailed compared to the U.S.) – offer investors the opportunity to generate higher-than-average dividend yields as well as attractive valuations trading at substantial discounts to net asset value.

High-street retail is more than just shopping, it is an experience.
U.S.
EU
Europe is relatively under-retailed with 1/5th the retail per capita vs. the United States Click here Source: Kempen

Spain

Economic recovery

New supply of office properties in Spain remains limited, especially in prime central business district submarkets in both Madrid and Barcelona. Office rents poised to increase as demand for space rises, which will be driven by projected growth in employment.

20%
potential upside in office rents Click here Source: BofA Merrill Lynch Global Research, Cushman & Wakefield.

Japan

Tourism on the rise

Japan is undergoing a massive shift in spending patterns as people move away from material goods and towards life experiences, dramatically increasing domestic travel. This, coupled with growing tourism, is positively influencing hotel revenue per available room growth.

Inbound tourists in Japan: 2016 20 m+ Source: UBS, Japan National Tourism Organization
Inbound tourists in Japan: 2030 ~60 m Source: UBS, Japan National Tourism Organization

Hong Kong

Migration of office tenants from high-cost Central district

Decentralized office submarkets, such as Wan Chai and Island East, are situated to benefit from the growing demand of high-quality international tenants leaving the ultra-expensive Central district.

Rent: Central
HKD/sq. ft200
Source: JLL, BofA Merrill Lynch Global Research
Rent: Island East
HKD/sq. ft75
Source: JLL, BofA Merrill Lynch Global Research
Island
East
Wan
Chai
Central

Singapore

Industrial REITs delivering some of the highest yields in Asia

Recent growth in manufacturing activity will drive demand for the supply of industrial space coming online in the next year. In the meantime, we are getting paid to wait and collect some of the highest yields in Asia as new supply is absorbed.

Source: UBS Industrials REITs: 7%+ yields (among the highest in Asia)

Australia

Smaller, specialized operators

REITs focused on niche sectors, such as education, entertainment and self-storage, typically face less competition and less competitive pricing. Also, they are often undervalued because of less visibility in the market.

REITs in niche sectors offer 5%+ yields Source: JLL, Citi Research.
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This document is for informational purposes only and is not an offer or solicitation to deal in securities. Any opinion or estimate contained in this document is made on a general basis and is not to be relied upon for the purpose of making investment decisions. The statements made herein may contain forecasts, projections or other forward-looking information regarding the likelihood of future events or outcomes in relation to financial markets or securities. These statements are only predictions. Actual events or results may differ materially, as past or projected performance is not indicative of future results. Readers must make their own assessment of the relevance, accuracy and adequacy of the information contained in this document and such independent investigations as they consider necessary or appropriate for the purpose of such assessment. This document does not constitute investment research. Consequently, this document has not been prepared in line with the requirements of any jurisdiction in relation to the independence of investment research or any prohibition on dealing ahead of the dissemination of investment research. Any research or analysis used in the preparation of this document has been procured by Timbercreek for its own use. The information is not guaranteed as to its accuracy.