Listed real estate and rising interest rates - should we be concerned?

By Chris Bedingfield, Quay Global Investors, A Bennelong Funds Management boutique One of the more persistent themes in listed real estate today is the so-called headwinds of rising US (and global) interest rates. The narrative argues rising interest rates are negative for listed real estate prices. We believe there are a number of problems with this argument. There seems to be a veritable cottage industry based on the failed predictions of rising interest rates – remember 2011, or 2013 and the end of QE3? Perhaps we should get interest rate predictions right before worrying about the consequences (if any). While at times the correlation between the long bond rate and listed real estate prices is high, over the longer term, there is little empirical evidence to support any relationship between nominal interest rates and real estate values. This is not surprising since there is no theoretical basis for a link between nominal interest rates and commercial real estate values. Read more (VIEW LINK)