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Not all real estate investors invest beyond local markets, but even those who don’t should take note that cross-border capital flows are picking up again following a dramatic post-crisis retrenchment. The increased flows mean more liquidity for all investors, as well as signaling the general, though uneven, return to health of the global industry. They also indicate that some investors are beginning to adjust their objectives—and expand their choices on the wide menu of strategies that is one of the hallmarks of the asset class.

In the years leading up to the financial crisis, real estate investors went abroad in search of opportunities, with cross-border capital flows peaking in 2007 at almost a third of global volume, according to DTZ Research. This coincided with a general move across the risk spectrum as investors viewed real estate as more of a return enhancer and less of an income-producing portfolio diversifier. Then came the crisis and subsequent pullback, which saw cross-border flows’ share of total volume shrink by more than half.

After the asset class was oversold, real estate attracted renewed interest as part of a wider migration to “real assets” and income-producing alternatives in a world of low interest rates. That popularity resulted in increased capital flows, especially to core real estate, with open-end core funds in the US attracting near-record flows in recent years, according to NCREIF.

Now some investors are turning their attention to more opportunistic investments outside their home markets. We see them seeking opportunities ranging from properties in hard-hit European peripherals, where values are still around 50% below their peak, to plays in some Asian markets, where long-term growth bodes well for investments. Yet this does not mean that core, income-producing investments in developed markets are out of favor. On the contrary: In the UK, a nascent recovery is putting upward pressure on capital values, which in our view look relatively attractive. In the US, moderate economic growth and near-record-low new construction creates good potential for property income growth. The other key strategies—high-yield debt and public REITS—also offer good opportunities for those desiring high-income yields or public market liquidity. Global equity REITs trade at an 8% discount to net asset value, according to SNL Financial, making this a good entry point.

Bargain Hunting

The multispeed global recovery has not shortened the menu of real estate investment options. What it has done is bring different kinds of strategies to the fore in different regions. No one investor will want everything available everywhere. But a quick review of what’s attractive around the world in the fourth quarter of 2013 sheds light on the state of this complex asset class.