As the global recovery gains traction, GDP expansion is expected to improve in the US, EU and UK over the following years. Growth in the US appears sustainable at present, driven by consumer demand, private investment and improved competitiveness driving exports. Additionally, a number of countries in Europe have seen the worst of their fiscal austerity programmes, and are showing improvements in consumer confidence which are expected to boost domestic demand. Despite the recent slowdown, developing economies are still likely to be the long term drivers of global GDP growth given their favourable demographic profiles, high saving rates and continued growth in investment. These countries have experienced some short-term challenges due to escalating current account deficits and overreliance on their export-oriented sectors. We believe developing economies will need to continue focusing on driving domestic demand to have a more balanced and sustainable GDP mix. However, with most emerging economies having built up relatively healthy foreign exchange reserves along with their high savings rate, favourable demographics and relatively strong government balance sheets, we believe the longer-term outlook for the developing world remains positive.

Global property rentals and occupancies are improving gradually and capex remains focused on extensions and refurbishment of existing strong locations. The normalisation of global bond yields pose a risk for REIT financing cost and valuations, but the REITS that have well-structured balance sheets will deliver stronger income growth and outperform in this environment. Global REIT cash flow yields (FFO yield) and dividend yields remain attractive relative to bond yields and the Oasis Crescent Global Property Equity Fund continues to take advantage of these opportunities. The average cash flow yield of the fund is 6.3% and the dividend yield is 5.2% which continues to offer value relative to the average bond yield and inflation of 2.8% and 2.1% respectively.

The global economy is expected to grow by 3.3% in 2013 with the growth primarily being driven by developing economies. The developed world has started to show some signs of improvement as they gain competitiveness through lower unit labour costs with growth in the US and EU expected to accelerate going into 2014. However, the rate of growth in developed economies is likely to remain muted given the need for continued austerity and fiscal constraints on government balance sheets. Private sector spending and job creation is likely to be key in sustaining economic growth within the developed world. Developing economies face some short term challenges due to rising unit labour costs and increase in cost of living which is transpiring into social unrest as seen in Brazil and South Africa. At the same time, the Chinese government has been tightening monetary policy to reduce lending and reign in the property market. These challenges do make the short term outlook for developing economies slightly uncertain. However, we believe that these developing economies including Sub-Saharan Africa are well positioned for long-term growth given favourable demographics, the continuing trend of urbanization and relatively stable government balance sheets. Lastly, while capital markets have been jittery on talks of tapering off of Quantitative Easing (QE) in the US, we believe that monetary policy normalization would be a sign of robust underlying fundamentals and improving unemployment levels and should be viewed as a positive element of sustainable long-term growth.

Supply of global property has been very low over the past five years and demand is recovering, especially for better quality properties. It has become more difficult for REITS to find good quality acquisitions that offer value and their focus is on refurbishing or extending existing properties that are in strong locations. The increase in global bond yields are a risk for REIT valuations and financing cost, but the REITS that have a competitive advantage and well-structured balance sheets will deliver stronger income growth and outperform in this environment. In addition, global REIT cash flow yields (FFO yield) and dividend yields are still attractive relative to bond yields and the Oasis Crescent Global Property Equity Fund continues to take advantage of these opportunities.

The global economy experienced a significant shift over the past decade with the developing world coming to the fore. The substantial improvement in these economies fiscal and financial positions during this period has led to currency appreciation relative to the developed markets. In addition, the robust demand and subsequent boom has led to a substantial rise in costs, particularly labour. This has resulted in a decline in competitiveness relative to the major developed markets. Cognizant of the rise in urbanization and their huge populations, the developing economies are looking to encourage consumer expenditure for their next phase of growth. Therefore, while developing economies are anticipated to remain the major drivers of global economic growth, the sources of growth within these economies are expected to change over the next 10-20 years. The developed world faces a tough environment but should deliver low but positive growth over the next few years. North America in particular is undergoing a resurgence in their manufacturing and resources sectors which should support global economic growth over the medium term. US fiscal deficit and government debt levels are however high and uncertainty around the debt ceiling may suppress investment in the near future. Political risk in the Euro-area remains elevated while future fiscal consolidation efforts will need to be managed very carefully on the continent. In the short term, the global economy remains tough but some positive momentum in the US and China in recent months points to an improvement in economic growth in the year ahead.

Supply remains limited in the global property market as developers are not getting access to funding from banks. This is positive for good quality REITS who have strong balance sheets as they are well positioned to provide space to customers as the demand recovers. The demand is stronger for prime quality and more efficient properties which will result in a stronger recovery in rentals for these properties, while secondary quality properties will continue to lag. Global REIT yields remain very attractive relative to bond and cash yields and the Oasis Crescent Global Property Equity Fund continues to take advantage of these opportunities with the average cash flow yield of the fund at 6.2% and the dividend yield of 5.5% being very attractive relative to the average bond yield and inflation which is 2.2% and 2.3% respectively.