10 reasons to invest in European listed real estate

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Editions

1. 10 reasons to invest in European listed real estate
2. 01 Diversification across asset classes adds value to a portfolio
3. 02 Yield spread and risk premium
4. 03 Listed real estate and interest rates
5. 04 Better quality assets
6. 05 Valuation is attractive compared to direct real estate
7. 06 Lower sector volatility
8. 07 Correlation with direct real estate is what investors want and what the sector offers
9. 08 Opportunity to diversify across countries, regions and subsectors
10. 09 Listed real estate is a solid inflation hedge
11. 10 More efficient and liquid than direct real estate

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Lower sector volatility

Another key point is the solid decline of sector correlation with equity markets. Listed real estate’s beta versus European equities has historically averaged 0.60x. In the 2nd half of the 2000s, however, the sector Beta started to shoot up well above par. This was entirely due to the leveraging up of the sector, which initially fuelled NAV and EPS growth before witnessing a severe downturn in the 2007-08 crisis. With deleveraging under way in the sector, volatility has fallen while the sector Beta has gradually reverted to historic levels.