US Real Estate stocks have rooms to gain as investors remain selective


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US Real Estate stocks have rooms to gain as investors remain selective

Once heavy-eyed US real estate market drowning down to the sleepy hollows appear to be rekindling growth over the second half of the year amid lower mortgage rate, however, investors seemed to be highly selective about their bets on property stocks.

Since industrial Real Estate Investment Trusts (REITs) alongside residentials had been the popular bets, retailers seemed to be out of favor. Besides, the dividend-rich, slow-growing S&P 500 Real Estate index had posted a rise of 18.5 percent so far, leaving behind S&P 500’s half-yearly progress of 16.99 percent, while several analysts had been quoted saying that the real estate stock indexes had been on course to post their biggest annual gains since 2014.

Adding that an REIT dividend yield of 4.5 percent and cash flow growth of 4-5 percent could bring a double-digit percentage return for the REIT investors over the next one year and a half, a Macquarie Investment’s Chief Investment Officer for real estate, Bob Zenouzi said, “If the Fed policy is benign and you don’t see an acceleration of earnings, (REIT) dividend yields and a steady cash flow are pretty attractive to investors,” while a portfolio manager at AEW Capital Management, Gina Szymanski said that the investors should be looking forward to a high-single-digit return out of REITs over the next twelve months.