Amid global economic uncertainty and persistent rising inflation, mainly caused by Russia’s ongoing invasion of Ukraine and China’s Zero Covid policy, investing in real estate globally can be considered a less volatile investment solution.
Real estate investment is an alternative asset that has a different correlation with other investment assets that provide stable long-term returns for investors during the course of the economic cycles. It is an asset that can grow in conditions of rising interest rates and inflation, including benefitting from the economic recovery from the Covid-19 pandemic.
According to UBS Asset Management research in 2020 between inflation and real estate returns, the firm’s analysts scrutinised almost 1,600 data points dating back to 1980, across 26 countries’ main property sectors. The study showed that in global unlisted property portfolios, the returns outpaced inflation at 103%, reflecting that periods of higher inflation have typically been followed by higher real estate returns.
“The United Global Real Estate Fund Selection Not for Retail Investors – N (UGREF-UI), a global unlisted property portfolio, launched by UOB Asset Management in collaboration with UBS Asset Management, is Thailand’s first fund that invests in real estates through its mutual fund. It can serve as an inflation hedge and provide investors with the opportunity to receive returns during these challenging periods,” said explained Kulachat Chandavimol, Deputy Chief Marketing Officer, UOB Asset Management (Thailand).
The fund invests directly in high quality properties and is not listed like a traditional REIT. More importantly, unlisted global property strategies tend to be less volatile as they do not follow the ups and downs of the market.
With a ‘core’ investment approach, high quality, diversification and defensiveness, UGREF-UI Fund, the first fund open to Thai investors, is an institutionally managed fund of unlisted real estate assets. The fund is designed to mitigate inflationary pressures through investing in real estate around the world directly.
“To help protect investors' portfolios against inflation, we are focusing on investing in high-quality, tier-one properties in prime locations that are highly sought after by occupiers,” amplified Kulachat. “This enables investors to receive multiple, consistent income streams to support the portfolio’s stable returns over time. A team of professional leading managers and regional teams around the globe keep verifying the trends that support the outlook for local properties.”
Rental rates in these sectors can be revised more frequently, at least annually, given their shorter tenors to keep up with inflation.
“We also aim at investing in industrial groups that have the opportunity to generate higher yields than other forms of real estate and office buildings in cities with high occupancy rates that can generate good cash flow. With residential groups, the fund focuses on investments in apartments, senior housing and student dormitories in prime locations. For retail groups, we invest in high quality commercial properties in locations with high growth opportunities,” mentioned the Deputy Chief Marketing Officer, UOB Asset Management (Thailand).
“These sectors are less correlated to economic cycles. As such, returns from our global multi-manager real estate strategy normally do not fluctuate much and provide investors with a less volatile investment solution.”
UBS Asset Management’s flagship global real estate strategy currently covers a wide range of real estate investments through 59 mutual funds around the world. The funds will directly be invested in more than 9,000 real estate projects across 28 countries and income from more than 40,000
quality tenants spread across many real estate assets, including office buildings, apartments located in quality locations, logistics and warehouses, shopping malls, medical centres and hotels.
UOB Asset Management (Thailand) is always determined to offer novel products to broaden investment vehicles and opportunities to ensure consistent and long term satisfactory portfolio returns. Amid a highly volatile market environment, it becomes more difficult to gain attractive returns in stock markets.”
“Under these circumstances, UGREF-UI-N, a global unlisted property portfolio, has emerged as a popular asset that can help minimise portfolio volatility given that its prices do not swing with the market but are subject to fundamentals of relevant businesses. UGREF-UI-N is an investment opportunity which helps investors seek yield diversification by investing in properties globally. Investors therefore stand to benefit from attractive and more stable returns over the long term.”
Investors interested in buying this fund can enquire further information from the official distributors of UOB Asset Management (Thailand) or visit www.uobam.co.th.
United Global Real Estate Fund Selection Not for Retail Investors (UGREF-UI-N) has risk level 8+ (Significantly High Risk) with Hedging Exchange rate at least 90% of the foreign investment value with focus on investing in only one fund of UBS (Lux) Real Estate Funds Selection – Global (EUR) I-96-ACC (‘Master fund’).
The master fund has been established and managed by UBS Asset Management (Luxembourg) SA since 2008 and has a net asset value under management of more than 9,139 million euros. The fund focuses on active management to increase opportunities to generate consistent returns from rental income and increased asset value and has a policy to invest in quality real estate around the world, especially in the United States, Canada, Europe, Japan and Asia.