Look east for the best property investments

Dr Ana Cukic-Munro of Insight multi-manager funds tells us why she's investing in Asian and Eastern European property now - plus three of her favourite stocks in the region.

Our multi-manager funds cover a diverse range of asset classes, but I believe some of the most interesting opportunities just now can be found in commercial property in Asia and eastern Europe. Global property markets are not as correlated as other asset classes, such as equities. After the Asian currency crisis in 1997, Asian property went into a protracted bear market as foreign investment money was withdrawn. At the same time, Western property markets continued to deliver strong returns based on solid fundamentals of rental growth and investor demand. But valuations between the two markets have now become distorted as the bull and bear markets in the UK and Asia have run their respective courses.

Property yields are now below those provided by government bonds in the US and western Europe, while healthy property yields are abundant across Asia, particularly in Japan. In the UK, property is far more reliant on continued rental growth at a time when the economy is entering the latter stages of the cycle. But in Asian markets, the yield already offers significant upside and, with rental growth now appearing across all major markets, there is far more potential for strong yield compression and capital appreciation.

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