US - Real estate investment trusts (REITs) in certain sectors remain a good defensive investment particularly for investors seeking a high level of current income, according to Merrill Lynch research.
Merrill REITs specialist Steve Sakwa said that leading REITs were those that benefited from longer duration lease terms, the nature of the real estate or the location of the properties.
The most defensive sectors of the real estate market included areas such as healthcare, grocery-anchored shopping centres, manufactured housing and certain non-actively managed leased REITs. But office properties, apartments and regional malls would be negatively impacted, added Sakwa.
Turning to New York City, Sakwa said the situation is anomalous, and warned that the marketplace is likely to be tight for 12 - 18 months,taking one or two years for developers to begin construction followed by another two or three to complete enough new projects to replace the 14m square feet of space destroyed in the attacks on September 11.
By Madhu Kalia
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