Pension funds and insurance companies, among other institutional names, seem prepared to increase their allocations to US real-estate markets. Exploiting the expectation of better growth and less regulation, however, could lead to a blurred portfolio outcome. At least for now, the White House stands behind a policy mirage. Some economic momentum will carry the day. But even conservative property strategies, such as those centered on warehouses and data centers, cannot guard against the impact of outsized leverage on the US economy. Weaker-than-expected growth and tighter monetary policy will derail debt service. Developments in the US high-yield market are telling. Over the past week, the asset class has seen some of the largest outflows in four months. That fact is obscured by lingering enthusiasm for US equities. ■
Our Vantage Point: In Washington, casting aspersions seems to have more merit than delivering gains in economic policy. The Trump administration may offer surprises, but we increasingly expect them to be on the downside.
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Image: Los Angeles is a top commercial real-estate market. Credit: SeanPavonePhoto at Can Stock Photo Inc.