Step aside, American property owners, and make way for Chinese and Brazilian real estate.
Even though the latest data on U.S. housing now reflects an improved real estate market here in the States, countries such as Brazil and China are easily dwarfing that fledgling growth due to the economic and demographic realities of the emerging markets, analysts with real estate fund management firm Cohen & Steers reported Tuesday at a press briefing in New York.
For example, said Jason Yablon, a portfolio manager for the Cohen & Steers Emerging Markets Real Estate Fund (A Shares: APFAX), growth in China is being driven by rapid urbanization as rural populations migrate to cities in search of work and pressure the government to invest in infrastructure-related sectors such as housing.
Total returns for emerging markets real estate were 42.1% in 2012, according to the FTSE EPRA/NAREIT Emerging Real Estate Index, versus 18.1% in the United States, according to the FTSE NAREIT Equity REIT Index.
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“The consumer element is driving the emerging markets story,” Yablon said. “As China rebounds, large parts of Asia will benefit, and it’s helping the entire region.”
Further, Yablon pointed to an emerging-market trend toward securitization of real estate, which helped produce strong returns in 2012.