Higher property returns in emerging markets and the cyclical recovery of the property markets in stronger developed economies will be driving property investment in the coming year according to Sabina Kalyan of CBRE Investments UK.

Kalyan will address South African audiences at the ninth annual IPD Property Investment Conference on July 28 and 29 at the Westin Grand Hotel in Cape Town.

She says investors have digested their losses in the global financial crisis and are starting to get on the front foot again, and are actively looking for strategies that allow them to benefit from these dynamics.

The conference theme is ‘Expanding Horizons’, and it will be presented by Investment Property Databank (IPD), the global leader in property investment benchmarking, in partnership with the SA Property Owners’ Association (SAPOA) and sponsored by Old Mutual Property.

“In the previous cycle several developed market institutional investors wanted to diversify geographically, typically with indirect investments in similar economies to their domestic market,” says Kalyan. “For instance, UK pension funds would put a small allocation into Europe.

“This trend is growing. Investors are still more willing to diversify in a genuinely global manner – looking at an indirect allocation that is moving into emerging markets in AsiaPac and into the US. This means they still believe in the diversification argument and are willing to take it to its logical conclusion. It’s a welcome sign.”

She believes the SA property market has a lot of potential and should benefit from that move to true globalisation of portfolios. She says it’s a good thing that SA is being grouped with the BRICS acronym markets – Brazil, Russia, India, China and South Africa. But we need to make much more of this on the PR front to be seen more visible.

Kalyan says that although many global markets are not just post-recessionary but are actually growing really strongly, such as Germany and Sweden, investors are still cautious given the potential for a continued US housing market slump and the problems emanating from the fiscally challenged European countries.

“Investors are still targeting prime - highly visible, highly resilient – cash flows,” says Kalyan. “Only in a very few markets are investors willing to move up the risk curve and take a ‘refurb-release’ value-added play to take advantage of an expected rental recovery.

“This may reflect the fact that debt markets are still impaired. With credit less available than in ‘typical’ post-recession upswings, it should come as no surprise that we aren’t seeing typical post-recession investor behaviour.”

“Strategic insight from across the country, the globe and the property market will be in generous supply at the conference to inform prudent property investment strategies and decisions,” says Stan Garrun, managing director of IPD SA.

The conference will focus on eight essential topics for property investors: property cycles; global capital flows; real estate investment trusts (REITs); legal issues; residential investment and social housing; operating costs; property market data; and fund management.

Joining Kalyan is international speaker Arnoud Vlak of IPD Netherlands. SA property sector specialists speaking at the conference include columnist Max Du Preez, Andrew Brooking of Java Capital, Rob Wesselo of International Housing Solutions; John Loos of FNB Commercial, Wayne van der Vent of PIC REAM, Craig Hallowes of Pangbourne Property, Keillen Ndlovu of Stanlib, Rael Levitt of Auction Alliance; and Marius Muller of Pareto.

Muller says that in addition to global dynamics, operating costs are key challenges for the local property sector right now.

“South Africa has to look towards the future management and containment of property costs, particularly rates and taxes and utilities, and to a lesser extent, pressures on wage increases, to ensure continued growth of the sector,” says Muller.

“Another test on the local horizon is the greater transparency required in the disclosure of transactions between landlords and tenants. It is important to employ appropriate measures to facilitate the industry evolution to be compliant with new legislation, which requires an overhaul of transparency in the sector,” says Muller.

Visit www.ipd.com, email confer@iafrica.com or call 011 280 6633.