I received an email yesterday from Gold N’ Silver Blog asking for advice on buying into international REITs. Here’s the bulk of the message:
I’ve been looking for a fund to further diversify my retirement portfolio. ( I am pretty well diversified in the US and Foreign equity and bond funds.)
I know we shouldn’t market time, and I am investing for the long term (retirement). However, the int’l RE market did really well in 2006. Is it a good time for me to invest $$ right now? ( I’m looking at the Fidelity Int’l Real Estate Fund. )
I guess my question is, do you expect a cool down in the int’l real estate market?
Anyone with thoughts or insight on this?
It looks like green pastures to me. International governments, especially parts of the non-western world, continue to spend billions on infrastructure and real estate development projects, both residential and commercial.
In Canada, the Edmonton real estate market is up almost 48% in 2007. And in China alone, 300 million farmers are forecasted to move from rural farmlands into major Chinese urban cities in the next two decades. So there’s a great demand for prime real estate in both small and robust foreign countries.
International Real Estate should outperform Domestic US Real Estate as more foreign countries perform the arduous task of assessing the value of real estate properties. Many foreign nations lack the luxuries of real estate valuation tools like Zillow and full-time real estate assessors to determine fair market values. Lots of countries are in catch up mode.
Also, US and foreign investors are dumping billions of dollars into international REITs, which trade much differently than common stocks. International REITs may experience slower gains in the short term, but they are great long plays in my opinion.
Just plan your investment strategy, enter at a favorable price, and try to ignore short term market fluctuations.