Although real estate is starting to look expensive in historic terms, the recent rally it has enjoyed has generally failed to keep pace with the progress enjoyed by other asset types. Consequently, real-estate assets still offer good value relative to government bonds.

Even so, economic and financial ‘normalisation’ are bringing the prospect of rising government bond yields ever closer. Meanwhile, recent movements in the bond markets have reminded investors that yields can move significantly higher in a short space of time.

This paper sets out to provide a framework for analysing the outlook for global real-estate assets in a world of rising bond yields.