Will McIntosh of ING Real Estate

In the years since the downturn of the late ’80s and early ’90s, real estate has been carrying investment portfolios. ING Real Estate’s US View reports that much of the industry’s strong performance in 2004 was “yield-driven as capital and liquidity remained at all-time high.” And the firm does not expect that capital flow to change over the next 18 to 24 months. “With so much capital weighing on the system, return performance is unlikely to slip significantly in 2005, although some additional yield compression could occur,” the report predicts. According to Will McIntosh, managing director, global and US head of research and strategy at ING Real Estate in New York City, the shift has finally opened investors’ eyes to the fact that real estate is a great diversifier–something the industry has been saying all along. But to be a player, knowledge is power and, to that end, McIntosh and his colleagues produce semi-annual reports on global and regional market conditions. In an exclusive interview, McIntosh–who was joined by Indraneel Karlekar, vice president, global research and strategy–spoke with GlobeSt.com about ING’s recent US View .

GlobeSt.com: Which property type seems to be taking over now in the private real estate market?

McIntosh: Fundamentals are improving across the board and the retail sector has clearly been leading the way. This past year alone the private market produced a 23% return, which is off the charts. Because of the favorable economic conditions and demographic trends, this performance is going to continue. Probably nothing like the 23% we saw in 2004, but we think there is still going to be strong performance over the next three to five years.