Bond Yields Continue to Slide - Bullish for Real Estate
Bond yields continue to ease, and there is little on the horizon that seems to indicate a change in course. This will be very supportive of all income producing investments, real estate especially.
From the article:
The rush into government bonds during 2016 shows no sign of reversing as a weakening global economic outlook and political risks fuel demand for perceived havens.
German 10-year bonds headed for a third weekly gain, pushing the yield close to zero, while gains by Japanese and Swiss securities with similar due dates drove their already-negative yields to new all-time lows. Demand for Treasuries kept yields near their lows since February, when investors were unnerved by a selloff in emerging markets.
“The environment is fundamentally supportive of these low yields, and there is nothing in sight, at least in the short term, that could trigger a trend reversal,” said Marius Daheim, a senior rates strategist at SEB AB in Frankfurt. “The labor market report was one thing which has driven the Treasury market and has supported other markets. If you look in the euro zone, you have Brexit risks that have risen recently, and that is also creating safe-haven flows.”
Prudent Growth's strategy of acquiring smaller properties at attractive prices should benefit in this slow growth, low rate environment. By not engaging in "bidding wars" that are common in the larger, class-A markets, we can be true value buyers, and return distributions to investors in the 9% to 11% range - a true rarity in this market!