Several years into the recovery from the global financial crisis, the good deals in core properties appear to be gone. Too much capital is chasing too few targets in major markets around the world.

“The weight of money is outstripping the supply of institutional-grade properties of most gateway cities globally,” says Myles Huang, research director for Asia Pacific Capital Markets at JLL.

This intense competition is pushing yields to fresh lows that increasingly are below the hurdle rates of institutional investors. The situation is likely to push investors up the risk curve in terms of peripheral locations in major cities or secondary cities. Some have expanded the scope of their investments to include noncore assets, such as value-add or development.

It also is likely to push institutions into alternative, niche asset classes. Given the relatively-small stock of investment-grade assets, it is especially true in the Asia Pacific region that demand for core p