GLOBAL - Institutional investors looking to guarantee strong returns in 2011 cannot rely on portfolios consisting purely of cities in developed markets, LaSalle Investment Management has warned.
Examining market trends globally as it released its 17th Investment Strategy Annual, the manager said that territories in Europe, such as the UK, France and Germany, would mostly offer retail and logistics opportunities over the next 12 months, while Asia-Pacific markets such as Singapore and Australia were more likely to grant returns through hotel investments.
Jacques Gordon, global strategist at LaSalle said that developing countries should also be targeted, due to the "waves of liquidity" that would wash over them.
"In the low-growth countries, investment performance will get a boost from low interest rates and a rising flow of debt and equity capital, despite the weak recovery," he said, highlighting the advantages offered by rapid urbanization and a burgeoning middle class.
Kenneth Tsang, head of Asia Pacific Strategy for the company added that increasing number of IPOs in China would broaden the investible space in the country's listed sector, but also believed that Japan offered opportunities.
"Real estate debt will offer more opportunities as falling values have generated large gaps in the capital structure in Japan; lack of development finance will create more opportunities for operators with proven track records and strong bank relationships," he said, adding that Australia was another market where rescue capital and bridge financing could be employed by investors.
As well as rescue capital Australia, alongside Singapore, also offered lucrative hotel investments in areas where the market had yet to be saturated.
Examining the European market, LaSalle said that fears of sovereign debt default in Greece had been somewhat overstated in 2010, the situation in Ireland, Portugal and Spain continued to cause concern.
Alistair Seaton, the company's senior strategist for Europe, said: "Despite the original intentions of the single currency, Europe remains a heterogeneous region. This diversity will provide opportunities for investors, but there will be few easy wins given the subdued economic backdrop."
He added: "The primary challenge will be investing in a low growth environment without taking on unwanted or unmanageable risks."
The company pointed to the UK, Germany and France as stable investments and said that if exposure to the Central and Eastern European market was desired, then Poland, with its large domestic market, was worth consideration.