Shifting yield curves create a currency hedging opportunity
The divergence in yield curves across markets has been notable, with most experiencing significant upward shifts in the last two years. Japan, however, stands apart from this trend, presenting a unique opportunity for commercial real estate investors to focus on Japanese assets for both leveraging and currency hedging.
What you will learn:
- The gap in yields between the dollar and the yen has reached levels not seen in decades, which has created highly favourable currency hedging conditions. The more modest movement in Japan’s rates also boosts the market’s attraction as it has maintained its status as having highly accretive debt terms for CRE investors.
- While the use of gearing and currency hedging presents its own set of risks, five-year forecast returns across for the CRE sector are likely to fall short of required returns (or hurdle rates) in several major markets. Japan is the major exception to this rule.
Tags:
Related Posts
Post
MINGTIANDI: Oversupply weighs heaviest on China’s office markets
China’s office markets have been flooded with new supply, evidenced by higher vacancies relative to other global markets.
Find Out More
Post
Chinese office markets look set for a lost decade
Office markets across China's major cities continue to deteriorate after consecutive years of rising vacancy rates and falling rents. Vacancy rates are now 20%-40% across the major cities – the highest among all major global markets.
Find Out More
Post
Relative return index signals improving CRE attractiveness
Our latest global relative return index (RRI) signals that risk-adjusted investment opportunities in commercial real estate (CRE) should start to emerge this year before becoming more widespread in 2025. At this point, our baseline expected returns move higher than required returns, pushing the global all-property index above the 50 mark.
Find Out More