Global Investors Still Favor North America

Here is a great bit of news I saw online regarding the future demand of commercial real estate by overseas investors…..Dated march 22, 2017

HONG KONG—New reports from Cushman & Wakefield and CBRE expect the massive wave of capital into commercial real estate to continue rolling.
Hong Kong skyline Victoria Harbor in Hong Kong; Cushman & Wakefield sees $132 billion in new capital headed toward Asia Pacific destinations.

HONG KONG—North America continues to represent the prime destination for real estate investors globally, according to reports from Cushman & Wakefield and CBRE. Cushman & Wakefield said Wednesday that the amount of new capital available for investments this year stood at US4435 billion, while CBRE’s Global Investor Intentions Survey 2017 cites US$1.7 trillion in dry powder.

“With the great wall of money targeting real estate at near record levels, investors need to remain focused but agile,” says Elisabeth Troni, head of EMEA research & insight at Cushman & Wakefield. “We expect 2017 to be marked by ongoing competition to place capital and source attractive opportunities.

“While core real estate strategies remain highly attractive, demand tends to outstrip supply in many key markets, pushing down yields and challenging investors,” continues Troni. “Unable to find enough existing core assets, investors are engaging in ‘build to core’ strategies targeting development or redevelopment projects that create core assets in top markets. In addition to new investment strategies, we expect new sources of capital to be unlocked around the world with countries such as China, Malaysia, Taiwan and South Africa to the fore.”

While newly raised capital targeting the EMEA region diminished by 9% compared with 2016, totaling US$130 billion, for the Americas it’s up 2% year over year to US$173 billion. Asia posted a slight increase to US$132 billion. The global tally is off by 2% from the year prior, representing the first drop since 2011, although Cushman & Wakefield notes it’s still the second highest total on record.

On a country by country basis, Cushman & Wakefield expects the US to remain the leading destination for investors, followed by China and the UK. Single-country investment strategies now account for 61% of available capital, up 55% over the past three years.

CBRE’s investor survey also puts North America at the top of the rankings, with Los Angeles the most favored city within the region. In the EMEA region, London is top-ranked, according to CBRE, while for investors targeting Asia Pacific the go-to market is Sydney.

The majority of investors surveyed by CBRE indicate that their buying activity will increase or remain the same compared to last year. Forty percent of investors said they plan to spend more in 2017, outnumbering those planning to spend less (16%) by a wide margin, CBRE says. On a global basis, office is the preferred sector for 26% of investors, with multifamily favored by 21% of investors and logistics cited by 22%.

“This time last year, investors were reeling from the volatility in world stock markets; now they are seeing equities reach record highs and economic sentiment is positive,” says Chris Ludeman, global president, capital markets, CBRE. “Although there is uncertainty about the direction that economic policy will take, there is also a growing anticipation that changes will unlock growth. While there are some clouds on the horizon–emerging market debt looks problematic, as does Greece’s financial situation–economic momentum, alongside the yield advantages of property as an asset class, should ensure another year of substantial capital flows into global real estate.”

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