Global Real Estate ETFs: Challenging Times or a Renaissance in the Making?

Times are changing in the world of real estate, but investors shouldn’t fret at the market uncertainty because of COVID-19. While the pandemic has altered the playing field in the global real estate market, investors can still get exposure to the space via the Xtrackers International Real Estate ETF (HAUZ).

The fund seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization-weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.

If cost is an issue, HAUZ comes in at a 0.10% expense ratio. It’s a small price to pay for global real estate exposure versus, say, buying luxury property off the Amalfi Coast in Italy.

HAUZ Chart

A New World of Real Estate

The new work-from-home culture is certainly changing the landscape of real estate. With less demand for office space, the shift in real estate is already happening, particularly with respect to commercial real estate.

“The findings reveal how the pandemic is causing investors to grapple with significant, unforeseen economic upheavals and the major shifts in work/life balance, which may in time force investors to repurpose their assets,” a Propertyfundsworld article noted. “It also highlights the potential widening gap between sustainable and ‘stranded’ assets. Issues such as social equality and climate action are impacting business models more strongly than ever before, particularly with the aspirations of many governments to achieve net zero carbon emissions in the coming decades.”

“The report suggests that the world has moved towards an increasingly risk-off environment during 2020 to such an extent that uncertainty in the markets is becoming the ‘new normal’,” the article said further. “At the same time, as bond levels and interest rates remain low across the UK and Europe, real assets have emerged as the asset class best placed to offer a safe haven to multi-asset investors.”

“In many markets, the response to the virus has either accelerated or consolidated already established trends, such as an increasing acceptance of home working for those able to do so,” said Jose Pellicer, Head Investment Strategy at M&G Real Estate. “Our attitudes towards future investment decisions must be guided by the new environment in which we are all operating and we must accept that a high level of uncertainty will continue for some time.”

“We are already seeing growing momentum among investors who are keen to take a more proactive and considered investment approach in the real estate sector,” he added.

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