Global real estate investment trusts (REITs) should deliver total returns of 8 - 12 per cent in 2011, helped by improved economic conditions and increasing dividends, according to ING Investment Management (INGIM).
"Rising interest rates need not be feared, as listed real estate often delivers positive returns in periods of economic improvement, even if interest rates rise", INGIM said in its 2011 global property securities outlook.
The primary driver of real estate company returns will be growth in cash flow per share, INGIM said, singling out Hong Kong property companies as the sector's outperformers over the next 12 months with earnings forecast to grow by 15 - 20 per cent while producing dividend yields of 2 - 3 per cent.
Japan should deliver a total return of 5 - 10 per cent and Singapore 10 - 15 per cent, INGIM said.
Continental Europe is expected to realise a total return of 5 - 10 per cent over the next 12 months, along with a 5 - 6 per cent dividend yield.
The UK is expected to deliver a total return of 8 - 12 per cent over the next year.
In the US, INGIM said the fiscal and monetary stimulus-fed economic recovery should help the property investment sector but warned that the depressed American housing market and high unemployment remained formidable obstacles.
Overall INGIM said, returns across the US and Canada should be in the order 8 - 12 per cent.
Although the report did not include any predictions for the Australian REIT market, it did show that property companies in Australia were trading at a discount of around 13 per cent to their net asset value at the end of 2010.
