In the the latest episode of The REIT Report: NAREIT's Weekly Podcast, Steve Buller, portfolio manager with Fidelity Investments, discussed the impact of real estate being elevated to a new headline sector under the Global Industry Classification Standard (GICS) on the discipline of real estate investing.
Buller downplayed the effects of real estate’s GICS move on his job as a fund manager. However, he did acknowledge that real estate funds are likely to see greater capital flows. Many investment funds underweighted real estate when it was part of the financial sector, according to Buller.
Buller is managing Fidelity’s Global Advisor Real Estate Fund, which recently launched. Buller said Fidelity saw an opportunity for broker-dealers to use the fund to communicate the benefits of global real estate investment to retail clients.
“Roughly half of the opportunity set for investing in listed real estate is outside the United States,” Buller said. “We feel a global approach can provide potential benefits of this asset class.”
Additionally, Buller noted that some of the more focused real sectors such health care and data centers offer growth opportunities abroad.
In terms of investment opportunities, Buller said he’s looking to the United Kingdom. Even though the London office market will likely experience rental rate decline, he pushed back against the idea that property valuations will fall precipitously.
“Capital will still be attracted to the London office market,” Buller said. “That will help sustain values.”