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.

Important information

Unless stated otherwise, any sources and opinions expressed are those of Aviva Investors Global Services Limited (Aviva Investors) as at 20 December 2015. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Some of the information within this document is based upon Aviva Investors estimates. It is not to be relied on by anyone else for the purpose of making investment decisions. This document should not be taken as a recommendation or offer by anyone in any jurisdiction in which such an offer is not authorised or to any person to whom it is unlawful to make such an offer or solicitation.