Over the last decade leading economies have witnessed an environment of historical low interest rates. Consequently, cash provides a negligible return in relation to fixed income equities and alternatives for investors seeking returns.
The current Covid-19 crisis will undoubtedly further compound the situation and the search for yield by money managers will garner further momentum towards Alternatives, Real Estate being the obvious haven for providing yield.
This is further strengthened from data released by Office for National Statistic UK (ONS) confirming that UK average house prices increased by 4.7% over the year to September 2020, up from 3.0% in August 2020, to stand at a record high of £245,000. London's average house prices hit a record high of £496,000 in September 2020, according to ONS.
The outlook for UK interest rates remains benign with a trajectory towards zero rates. Stock markets across the world have displayed heightened volatility, consequently this presents a pertinent question for investors currently observing the current disparity in the search for yield.
Real Estate asset class can provide returns greater than those provided by cash and bonds, whilst eliminating the risk posed by volatility of equities. With the average returns for the past four years in real estate achieving 1.8% (IPF, July 2020) and returns for the next four years being projected to achieve 3.6% (IPF, July 2020), real estate investment provides an alternative as an asset class for stable returns.