Global Real Estate Fund
What is it?
Real estate and `hard assets` bring with them a layer of less tangible risks around both investment and divestment, which are not as relevant to liquid assets traded via a regulated stock exchange. These risks vary substantially from one country to another. Designed for the Real Estate investment professional, our Global Real Estate Implementation Risk (GREIR) tool uses seven relevant data sources to quantify and calibrate the ex-ante “Implementation” risk for 60 countries around the globe, by providing a risk score for each country. How much of the total projected return could be `at risk` in, for example, a core market versus an emerging market?
How to use it
GREIR calculates a risk score based on the seven data sources and then ranks the least to the most risky countries. In addition, the score is converted into a risk adjustment factor, allowing the user to compare what portion of the total projected return could be at risk of not materialising. This information can help the professional user to ascertain their global 'risk budget'.
The results produced by this calculator are based on the specified sources and provide general information only. The results do not constitute financial or other professional advice from Aberdeen Standard Investments. If you require financial or other professional advice you should consult a suitably-qualified professional. Aberdeen Standard Investments has taken every care in preparing this calculator but does not warrant the data used or the results produced. Nor does it accept responsibility for any loss caused by reliance on the results generated by this calculator.
The generic information generated by this tool is for real estate investment professionals only and must not be relied on by anyone else. If you are not a real estate investment professional, you can go to our main website https://www.aberdeenstandard.com/ for information.
Ease of Business
This annual index provides prospective businesses with a first step when assessing the attractiveness of a country. Factors measured include the complexity and cost of regulatory processes, ease of starting a business and the strength of legal institutions and protection. This is relevant because demand for business space is a key driver of real estate and ease of doing business a gateway to new business formation. Updated annually.
Source: 2018. World Bank Ease of Doing Business Index. © World Bank CC BY 3.0 IGO license.
This annual report focuses on institutions, infrastructure, the macroeconomic environment, higher education and training; goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation. This is relevant to real estate in terms of the attractiveness of the macroeconomic environment for business investment. Updated annually.
Source: Global Competitiveness Report, World Economic Forum, Switzerland, 2017-18.
This annual index covers institutions, human capital and research, infrastructure, market sophistication, business sophistication, knowledge and technology outputs and creative outputs. The index provides an indicator of how future-ready a country is in terms of technology and innovation. Real estate is increasingly affected by rapid changes in technology and investors would want assurance that their asset can offer the technological features required by tenants. Updated annually.
Source: World Intellectual Property Organization Global Innovation Index 2017. Material originally provided by the World Intellectual Property Organization (WIPO). The secretariat of WIPO assumes no liability or responsibility with regard to the transformation of this data.
Public Sector Corruption
Transparency International’s Corruption Perceptions Index ranks countries around the world according to their perceived levels of public sector corruption. Scores range from 0 (highly clean) to 100 (very corrupt). The perception of corruption is more powerful than the level of corruption and is particularly relevant for real estate when it comes to accessing markets, protection of ownership and income. Updated annually.
Source: Transparency International Corruption Perceptions Index 2016. © Transparency International. All Rights Reserved. For more information, visit http://www.transparency.org.
This real estate specific index is a comprehensive assessment of the real estate sector. The index includes transparency of performance measurement, market fundamentals, governance of listed vehicles, regulatory and legal, and the transaction process. The index is a staple of the real estate market and a key indicator of the attractiveness of a market. Updated every two years.
Source: Jones Lang LaSalle Global Real Estate Transparency Index 2016. © Jones Lang LaSalle
Sovereign Stability (Credit Default Swaps spreads)
CDS spreads are relevant and provide a real time indicator of credit risk insurance premiums and/or volatility in a country. Updated quarterly.
Liquidity (Real estate market size)
Liquidity is a key consideration for real estate investors but direct real estate lacks the liquidity indication in the form of ‘freefloat’ enjoyed by listed companies. The size of the market (or market capitalisation) is important but liquidity (freefloat) also counts. We use the investment market size which includes the invested and investible universe as indicators of liquidity. Updated annually.
Source: IPD/MSCI, Datastream
Countries are scored for each of the variables and then a weighted average is calculated.