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Important Note Click to maximise

This is a financial promotion for The First Sentier Global Property Securities Strategy. This information is for professional clients only in the EEA and elsewhere where lawful. Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Currency risk: Changes in exchange rates will affect the value of assets which are denominated in other currencies.
  • Single sector risk: Investing in a single sector may be riskier than investing in a number of different sectors. Investing in a larger number of sectors helps spread risk.
  • Single country / specific region risk: Investing in a single country or specific region may be riskier than investing in a number of different countries or regions. Investing in a larger number of countries or regions helps spread risk.
  • Charges to capital risk: The fees and expenses may be charged against the capital property. Deducting expenses from capital reduces the potential for capital growth.
  • Property securities risk: Investments are made in the shares of companies that are involved in property (like real estate investment trusts) rather than property itself. The value of these investments may fluctuate more than actual property.
  • Emerging market risk: Emerging markets may not provide the same level of investor protection as a developed market; they may involve a higher risk than investing in developed markets.


For details of the FCA authorised firms issuing this information and any funds referred to, please see Terms and Conditions and Important Information below

For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document for each Fund.

If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

Three trends driving real estate investments in a post-pandemic economy: First Sentier Investors

Office real estate is undergoing a fundamental shift, while COVID-19 has accelerated a number of global real estate investment trends, according to First Sentier Investors.

In a client update, Stephen Hayes, Head of Property Securities, said: “COVID accelerated existing trends such as the continued growth and adoption of e-commerce, increases in data consumption and falling home ownership.

“However, new trends have also emerged, especially decentralisation of work. Since the pandemic proved the viability of remote working, we are seeing a shift from dense urban to more city-fringe and suburban locations. It’s part of a new emerging paradigm of living, working and playing locally.

“In line with this, we believe the office sector will experience a bifurcation between heavily disrupted sky rise office towers, in favour of modern “A” grade city fringe and suburban office buildings.”

Mr Hayes points out that serviced-based businesses are well-suited to the adoption of remote working practices.

“This brings into the question the need for high-rise office space which tends to be expensive, inflexible, congested and inefficient. By contrast, high-quality, low-rise suburban office buildings often have larger and more flexible floor plates and can offer greater amenity and more break-out space to drive collaboration. In many instances the difference in rent compared to high-rise CBD1 offices is as high as 50%.

“As a result, we believe these traditional CBD buildings will be heavily disrupted, experiencing higher natural levels of vacancy and falling market rents and valuations. Concurrently, low-rise, city fringe and suburban offices will see increased demand.”

Mr Hayes said that until now, the split between city-centre and city-fringe tenants has been driven by industry sectors.

“Traditional professional services such as finance, insurance, accounting and legal, have been using “old world” work practices. Whereas the burgeoning technology, media and IT sectors have been defining the “new life” trends of a more decentralised workplace. However, we believe there will be greater convergence between the new and old sectors going forward.”

Mr Hayes’ analysis noted that while physical retail assets are under pressure, e-commerce is creating tailwinds for the logistics sector.

“Unprecedented levels of price transparency have changed the game for retailers, who can only compete on price and availability. Wholesalers, omni-channel retailers and e-tailers are investing very large amounts of money into their supply chains, and the total capital inflow is immense.

“The key for them to efficiently managing inventory: who can get the good from the manufacturer or wholesaler to the customer door or store front the fastest? This requires very modern logistical warehousing. New facilities in countries such as Japan, are being purpose-built up to five levels high, with high-tech robotic systems to move goods around, making modern logistical centres very valuable.”

A strong thematic identified by First Sentier Investors is the residential-for-rent, which includes apartments and detached housing as well as manufactured housing.

“The appeal of residential-for-rent has been highlighted during the pandemic. When there is economic expansion, these assets experience growing cash flows grow as household finances improve and rental affordability increases. Then, during economic slowdowns, they continue to provide stable cash flows as the desire and ability to finance home ownership deteriorates.”

Regardless of short-term conditions, the fall in home ownership is a long-term trend, Mr Hayes said.

“Affordability is one driver, but there are also cultural changes. Younger generations don’t always value home ownership like previous generations, and are attracted to purpose-built apartments with high amenity. The affordability and offering can be very compelling versus home ownership.”

Overall, Mr Hayes said cash flows for REITs have remained fairly stable over the pandemic, and the long-term outlook for the sector is positive.

“Rent collections have all remained well above +90% levels this year for logistical centres, office buildings, apartments and detached housing, data centres, self-storage centres and health care assets such as hospitals and medical office buildings. The notable exception is shopping malls, which have been materially impacted.”

“In the main, real estate is set to be a material beneficiary from the expected reallocation of capital across global economies and this will create significant opportunities that will likely cross decades.”

1 Central Business District

Important Information

This document has been prepared for informational purposes only and is only intended to provide a summary of the subject matter covered and does not purport to be comprehensive. The views expressed are the views of the writer at the time of issue and may change over time. It does not constitute investment advice and/or a recommendation and should not be used as the basis of any investment decision. This document is not an offer document and does not constitute an offer or invitation or investment recommendation to distribute or purchase securities, shares, units or other interests or to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this document.

This document is confidential and must not be copied, reproduced, circulated or transmitted, in whole or in part, and in any form or by any means without our prior written consent. The information contained within this document has been obtained from sources that we believe to be reliable and accurate at the time of issue but no representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information. We do not accept any liability whatsoever for any loss arising directly or indirectly from any use of this information.

References to “we” or “us” are references to First Sentier Investors.

In the UK, issued by First Sentier Investors (UK) Funds Limited which is authorised and regulated by the Financial Conduct Authority (registration number 143359). Registered office Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB number 2294743. Outside the UK, issued by First Sentier Investors International IM Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registered number 122512). Registered office: 23 St. Andrew Square, Edinburgh, EH2 1BB number SCO79063.

Certain funds referred to in this document are identified as sub-funds of First Sentier Investors ICVC, an open ended investment company registered in England and Wales (“OEIC”). Further information is contained in the Prospectus and Key Investor Information Documents of the OEIC which are available free of charge by writing to: Client Services, First Sentier Investors (UK) Funds Limited, Finsbury Circus House, Finsbury Circus, London, EC2M 7EB or by telephoning 0800 587 4141 between 9am and 5pm Monday to Friday or by visiting Telephone calls may be recorded. The distribution or purchase of shares in the funds, or entering into an investment agreement with First Sentier Investors may be restricted in certain jurisdictions.

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First Sentier Investors entities referred to in this document are part of First Sentier Investors a member of MUFG, a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of any investment or entity referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk including loss of income and capital invested.

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