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When Schroders held its annual Global Real Estate conference in early June, it was not simply the record attendance that was the most striking feature. Duncan Owen, Schroders’ head of global real estate, says that what was different to previous conferences was the sheer range of delegates. As well as the usual suspects from the UK and Europe, says Owen, there were attendees from countries ranging from Brazil to China. Owen adds that the participants at this year’s conference included more investment generalists than in previous gatherings. Perhaps more important, he says, was that the chief investment officers (CIOs) at the conference appeared to be more positive about real estate as an asset class than the property specialists. “This indicates to me that CIOs who are looking at relative value are increasingly concerned about valuations of other mainstream assets,” says Owen.
It is easy to grasp why. Simon Williams, head of investment at BNP Paribas Real Estate in London, runs through the comparative numbers. He says that the rise in the UK property market since 2009 of about 39% compares with 75% in equities and 30% in 10-year gilts, but that real estate in the UK now yields around 5%, compared with 3.8%