关注不稳定利率环境中的收益

WORDSOLIVER SALMON Interest rate rises may be nearing their peak, butwhere they settle will have long-term implicationsfor real estate investors across the world is clearly more risk investing in other assets,such as commercial property, which meansinvestors will want a higher return to compensatethem for the risk they are taking. As interest ratesincrease and government bond yields rise withthem, riskier assets can begin to look lessattractive to investors. Most major economies, with theexception of China and Japan, haveseen interest rates rise sharply overthe past 18 months after more thana decade of being at rock bottom. This has had aknock-on effect on the pricing of many financialassets, including commercial real estate. Commercial property prices are typicallyexpressed in terms of a capitalisation rate, or caprate – the net income divided by the market valueof the asset. The historical correlation betweeninterest rates and this cap rate has focused realestate investors’ minds. They are keeping a keeneye on the potential future direction of interestrates as an indication of expected yields onproperty holdings. This current cycle of monetary tightening andinterest rate rises appears to becoming to an end.However, the question now for propertyinvestors isn’t how high interest rates may go inthe short term, but where rates will settle in thelonger term. Risk-free returns and the cap rateThe pricing of many financial assets is underpinned by the notional “risk-free” rateof return that investors would get if they heldlong-term government bonds. These are deemedrisk-free because most governments won’tdefault on this debt, so investors can beconfident of getting the promised return. There Where next for interest rates?In the past four decades, interest rates across advanced economies have been trending lower,as the graph overleaf shows.These reductions have been driven by a …IN ANUNCERTAININTEREST RATEENVIRONMENT SAVILLS.COM/IMPACTS This longer-term downward trendwas exacerbated by the 2008 globalfinancial crisis and the subsequentquantitative easing (QE) by centralbanks, which resulted in interest ratesclose to zero.More recently, interest rates decline in potential economic growth,underpinned by weak productivityincreases and a labour force growing ata slower pace due to falling birth rates.This has led to declining demand for investment, relative to the supply ofsavings, putting downward pressure oninterest rates.However, other structural issues have been rising as central banks haveresponded to the specific inflationarypressures caused by increased demandpost-Covid-19 and a sustained, ongoingenergy crisis.So will central banks start cutting have also contributed, including ageingpopulations (leading to increasedsavings for retirement), theglobalisation of trade and capital flows,and the transition to service-basedeconomies that are less capital-intensivethan goods-based economies. rates sooner rather than later? Or willrates need to stay higher? Here is asummary of the main arguments. IN THE PAST FOUR DECADES, INTERESTRATES ACROSS ADVANCED ECONOMIESHAVE BEEN TRENDING LOWER Secular stagnation Arguments for lowerinterest rates But this move has been relativelysmall in comparison and has made mostcommercial property a less attractiveasset class for investors, relative torisk-free assets like government bonds.In the short term, the longer interest Looking at these arguments, we believethat demographic change is likely to bethe most dominant factor, suggesting alower “neutral” interest rate and returnto a period of “secular stagnation”.However, some arguments for higherrates hold water. The end of QE andthe transition towards net zero arelikely to act as counterweights, forexample, meaning the neutral rate isnot as low as it has been for much ofthe past decade.However, this return to the “normal” A continued shrinking in thelabour force, coupled withweak productivity growth.No significant change tosupply issues around savings,given an ageing globalpopulation, rising householdincomes (particularly inemerging markets) anddiminishing risk appetite. rates remain above the neutral rate, themore likely it is that property yields willcontinue to rise. But if rates come downrelatively quickly, prices may stabilise.In the longer term, a permanently higher interest rate will force manyinvestors to deleverage. There has beena lot of talk about refinancing risk incommercial property following thesharp rise in interest rates over the past18 months. In practice, the level ofdistress that some anticipated hasn’tyet materialised.Instead, many investors can Arguments forhigher rates is unlikely to happen quickly. Whilethere are some positive signs thatinflation has peaked, central bankscontinue to err on the side of cautionwith concerns about a return to the“Great Inflation” of the 1970s. Stronger productivity growthemerging from greater use oftechnology. This could leadto increased demand forinvest