Is The Economy Helping Real Estate Investors?
Real Estate And Inflation: Not Necessarily A Bad Combination!
An important factor for property investors is that real interest rates remain stable at any cost, but this is not necessarily the case for nominal rates!
If interest rates rise in line with economic growth, and core inflation escalates as a result, this may be positive for both listed and non-listed real estate.
In the event of higher inflation, property owners would be entitled to increase rents in many parts of the world (indexation/rent reviews). Higher rents would eventually lift values, taking into account the usual 6 to 18-month time lag.
Indeed, we must assess the factors that drive interest rates in general, such as GDP growth, inflation, job creation and monetary policy.
Pol Robert Tansens
Head of Real Estate Investment Strategy
BNP Paribas Wealth Management
Discover more in our latest Real Estate report 2018.