Research - APRIL 21, 2017

Global real estate investment volumes to reach $1.39t in 2017

by Jody Barhanovich

Global real estate investment volumes are expected to reach $1.39 trillion in 2017, according to Cushman & Wakefield’s The Atlas Summary 2017 report.

Of this amount, Asia Pacific is expected to account for 44 percent, or $611 billion, followed by North America, which is expected to account for 34 percent, or $470 billion, and EMEA at 22 percent, or $307 billion.

“The real estate investment market will be even more dynamic in 2017 and 2018, with capital sources changing and targets evolving as opportunities emerge across the world,” says David Hutchings, head of investment strategy for capital markets, EMEA, at Cushman & Wakefield.

Cushman & Wakefield predicts that many investors will remain heavily focused on core cities in 2017 as they seek to ride out risk and build liquidity and longevity into their portfolios. For investors seeking growth or higher returns, new areas will be in demand, which may include new risks in core markets, Tier 2 markets in leading countries, or new and selective geographical targets including some emerging markets.

Broken down by regional trends, North America will be in the spotlight in 2017, according to the report, with a historically strong level of activity in the United States. However, tight supply and higher pricing may mean investment volumes fail to match the pace of the past two years.

Core cities with liquidity and economic growth will continue to attract most buyers, led by New York, Chicago, Los Angeles and Boston. Tier 2 cities and well-connected decentralized markets around gateway cities will see enhanced performance, and core-plus interest should focus on mixed-use assets in growth cities such as Miami, Atlanta, Austin, Denver, Phoenix, Seattle, and Charlotte, N.C., according to the report.

Asia Pacific is expected to see positive volume growth continue in 2017 as well, with good economic performance sustaining investor interest and delivering a steady increase in demand for modern commercial space from local, regional and global investors.

Core and core-plus strategies will continue to target Japan and Australia but with limited supply, stronger demand is also likely in core cities in China, Singapore and South Korea, as well as core-plus markets such as Taipei, Auckland and secondary cities or decentralized markets in core cities such as Sydney.

In Europe, a combination of steady economic growth, modest inflation and low interest rates looks promising for the occupier market in the best-performing locations. Overall, Asian capital will continue to spread to new markets in Europe, surpassing North American capital as the largest source of inward investment in 2017 or 2018.

Key Europeans areas offering well-balanced growth are Germany, led by Berlin, as well as the Nordics, followed by Spain, mostly in Barcelona and Madrid. Paris will also continue to outperform France as a whole and should be a target for investment, helped by its depth of infrastructure spending. Similarly, London will remain a good area for capital.


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