Real Estate Feels Impact of Interest Rates and Inflation

Taken from an article published in Professional Wealth Management, on the 11th August 2022, here (Registration Required): Real estate feels impact of interest rates and inflation - Asset Allocation - Professional Wealth Management (pwmnet.com)

"While all real estate has a tendency to be quite inflation-proof, some of it is “unbelievably good”, says Roger Clarke, CEO of IPSX, a regulated real estate stock exchange. “One type which is an outstanding hedge against inflation are very long-term indexed rentals, particularly if you have a tenant like the government. If you were able to get hold of property with tenants like that for 20 years indexed, it is almost like an index-linked bond and those are the most expensive investments in the world.” 

Perhaps counter intuitively, at the other end of the spectrum, very short-term agreements can provide excellent inflation protection as well. “A good example is self-storage, which reprices all the time so you can actually pass on price increases regularly. So very long or very short are both good hedges,” adds Mr Clarke."