Partners Group publishes market outlook for H2 2017: ‘In search of platform-building opportunities’
The investor appetite for global real estate remains solid among developed countries as yield spreads continue to be attractive for office, logistics and retail in most prime markets, according to Partners Group’s H2 2017 Private Markets Navigator report. The ongoing investor appetite for real estate is also reflected in global transaction activity, which has maintained positive momentum and is expected to increase back to 2015 levels, as highlighted below for the global office market.
Partners believes the current environment offers a reasonable variety of investment opportunities, particularly in properties and locations benefiting from social, demographic and technology trends.
In Europe the firm focuses on acquiring apartment and office properties in affordable urban locations with supply shortages. The demographic shifts and new urbanization are influencing office occupier demands across the region and creating opportunities to buy office properties below replacement cost and upgrade their design to cater to the changing ways in which people live and work. For example, such cities include Paris, Amsterdam, Berlin and Stockholm, among others.
Similar to the office market, both demographic shifts and new urbanization are also shaping the European residential segment. Partners sees a trend toward affordable and convenient living, especially in cities like Frankfurt, Berlin, Stockholm and
Copenhagen. These cities are experiencing high migration streams from inside and outside their national borders.
In the United States the firm continues to focus on acquiring space benefiting from urbanization. Similar to Europe, office occupiers in the United States continue to favor highly ammenitized urban locations that appeal to their busy lifestyles, meaning locations that combine life, work and play in one area. As primary markets are highly valued with cap rates, Partners focuses on secondary CBD markets that offer opportunities to drive net operating income growth. Examples include cities like Nashville, Austin and Atlanta, which are benefiting from corporate relocations, job growth and associated infrastructure improvements.
U.S. apartment properties have also been positively affected by the demographic and social trends. Declining home ownership rates are leading to stronger demand for rentals, especially among millennials. This group accounts for 43 percent of renters in multifamily properties.
And in the Asia-Pacific region, the firm’s investment approach focuses on key properties and locations that stand to benefit from the transformative trends shaping the global economy, in particular the need for affordable, urban living space and the continuous growth in logistics demand. The global trend towards dense city living is particularly pronounced in the Asia-Pacific region.
To read the full report, click here.