Global property investment volumes to surpass US$1 trillion this year
18 March 2013
News, Asia, Global
By Asia Asset Management
The global property investment market saw a modest 6% rise in activity during 2012 with volumes reaching US$929 billion, according to Cushman & Wakefield’s latest International Investment Atlas released on March 14.
In what was a difficult year in most markets, investment volumes rallied in Q4 signalling the beginning of real momentum and a return of confidence in the market, which could see volumes this year increase 14% to exceed the US$1 trillion mark for the first time since 2007.
The increase in activity this year will be led by North America and Asian markets and driven by increased allocations to property by institutions and high net worth individuals/families plus increased stock on coming to the market.
Glenn Rufrano, global president and CEO of Cushman & Wakefield, said: “2012 was a year of profound uncertainty in the global economy which impeded decision making and market activity. We anticipate there will be less uncertainly this year and in fact, a true change in market confidence and indeed momentum seems to have been confirmed in the early months of 2013 as major global risk factors are seen to be receding – albeit not yet disappearing.”
In 2012, China and the US were two key engines of the strong finish – the former benefitting from a record high in land right sales and the latter seeing a rush of activity to beat year-end capital gains tax hikes. However growth was far from limited to these two global heavyweights and a range of other markets in all regions saw a final quarter rally notably Spain, Poland, Norway, Switzerland, Indonesia, Thailand, India and Australia.
The market to date has remained selective and focussed on core product. By region, North America and developing Asia drove the overall global rise, with mature European and Asian markets largely flat and emerging markets in Europe, the Middle East, Africa and South America all down.
In 2012 by country, the US and Mexico were the biggest gainers in the Americas, Malaysia, Vietnam, Australia and New Zealand enjoyed the strongest growth rates in Asia, while for Europe, Finland, Norway, Switzerland and Ireland saw the highest growth. More modest increases in big markets like China, Germany and Hong Kong were also clearly instrumental in delivering growth at the global level.
Investment activity to rise 15-20% in 2013 in Asia Pacific
Improved macroeconomic conditions with sustainable growth across the region will boost activity and performance resulting in 15-20% increase in investment activity forecast. Investment demand will increase as faith grows in China’s soft landing but demand will also broaden and other markets such as Australia and Japan will be an increasing target for overseas investors while markets such as India and Indonesia are likely to be on the rise. Long-term trends such as urbanisation and the increasing middle class will add to demand to access a range of sectors including residential, especially in Chinese cities as well as higher growth markets as Indonesia and Vietnam.
John Stinson, head of capital markets in Asia Pacific for Cushman & Wakefield, said: “There are clear opportunities in all sectors. In office we expect global banks to follow regional banks in expansion plans fuelling office demand and generating steady rent growth in the major gateway markets of Tokyo, Shanghai, Hong Kong, Singapore and Sydney. Retail will be boosted by strong retail turnover growth off the back of buoyant GDP forecasts this year with Kuala Lumpur, Bangkok, Beijing and Jakarta likely to benefit the most. Overall the hottest sector this year will be logistics with major hubs of Osaka, Tokyo, Shanghai, Hong Kong and Singapore with strong demand and investment activity anticipated. For value add opportunities we see strong interest in Indonesia and Malaysia which have performed strongly during uncertain global markets and continuing strong sentiment for India which is now offering some of the most attractive returns in the region.”
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