Diversification through International Property Investment

Interest in international property investment can be traced back to the early 1970s with the collapse of the Bretton Woods fixed exchange rate system, the oil price shock of 1973 and the need to recycle petroleum wealth, all of which marked a sea-change in the global economy (Worzala, 1994: Lizieri and Finlay, 1995). Financial deregulation introduced in many countries during the 1980s subsequently resulted in the removal of many barriers to international investment. Increasing international investment has also been stimulated by the globalisation of economic activity, mainly through liberalisation and advances in information and communications technologies. The development of electronic information technologies gives support to the integration of financial centres. London, New York and Tokyo have emerged as the major world centres with a number of secondary centres acting as co-ordinating nodes in the network of capital flow (Lizieri and Plamer, 1992). Although the insurance and pension industries remain primarily domestic, as they globalise, institutions with liabilities in several countries will need assets in these countries to match them.