Public equity markets have been volatile recently, with a lot of downward movement. But even as stock markets have declined — including public real estate equities — private real estate values have appeared to hold steady.
From the Current Issue
Religious organization pensions and endowments walk a fine line between the capitalist pursuit of an adequate return on investment and the need to stay true to a group’s calling. This two-pronged approach to investing can be accomplished fairly easily when investing in equities and corporate bonds; it’s a little more difficult in the world of commercial real estate investment.
As early as mid-2015, a considerable amount of ink was spilled deciphering how this real estate cycle may rhyme with previous cycles, specifically the 2005–2007 period. Without a doubt, an understanding of real estate cycles is imperative. The cyclical nature of real estate, however, should not trump the secular forces at play.
What are the secular trends for real estate? One helpful construct is to draw on powerful trends in society at large and see how they apply to real estate. With this in mind, LaSalle has been organizing more of its investment research around the secular trends of demographics, technology and urbanization over the past 10 years.
Foreign investors in U.S. real estate have been stymied by the Foreign Investment in Real Property Tax Act, or FIRPTA, since 1980. At the end of 2015, changes to the law were introduced that could significantly affect U.S. property markets. Paul Buckley and Caroline James of First Avenue Partners recently spoke with the editor of Institutional Real Estate Americas on the implications for U.S. and non-U.S. investors.
With $472 billion of market value, the NCREIF Property Index closed 2015 with the highest annual total return since 2011, at 13.33 percent. The NPI total return trended down modestly each quarter of the year, however, primarily because of slower appreciation.
We are facing a period of inflection points. Everyone is focusing on the short term, but looking longer term, the future will be quite different from the past. Each year at Institutional Real Estate, Inc.’s Vision, Insights & Perspectives – Americas conference, I present some of the key factors affecting the world as we see it; these are a few of the ones you should be watching.
What typically passes for real estate risk analysis is at best simplistic sensitivity analysis — perturbing one variable, while holding other variables constant, to see the effect on the IRR or the equity multiple. This approach is deeply flawed.
Airbnb Inc.’s presence in key markets throughout the United States is growing at a rapid pace, with users spending $2.4 billion on lodging in the United States over the past year, according to analysis of the room-sharing company from CBRE Hotels’ Americas Research.
Closed transactions in the global real estate secondaries market totaled $8.2 billion in 2015, according to Landmark Partners. This is the seventh consecutive year of record transaction volume.
Emerging-manager programs continue to attract investor interest. The $134 billion Teacher Retirement System of Texas, for example, recently announced a $1.3 billion commitment to its emerging-managers program over the next three years.
The total value of all developed real estate on the globe reached $217 trillion in 2015, according to Savills’ annual Around the World in Dollars and Cents. The value of global property in 2015 amounted to 2.7 times the world’s GDP, making up roughly 60 percent of mainstream global assets and representing an important store of national, corporate and individual wealth.
Commercial property in Canada had a total return of 8.0 percent in 2015, according to the REALpac/IPD Canada Quarterly Property Index, up from 7.3 percent in the previous year.
The current narrative states 2016 is off to a turbulent start in terms of the global economy. Oil prices are low, and a slowdown in China’s growth rate means bad news for everyone. But perhaps China’s economy will not be as big of a problem as everyone thinks, according to Standard & Poor’s.
CBRE Global Investors has gone Down Under on behalf of a German client, acquiring the South Wharf Tower in Melbourne, Australia. The 225,000-square-foot office building, completed in 2009, represents CBRE Global Investors’ first direct property purchase in Australia.
Transaction volume in North America was up significantly in fourth quarter 2015, year-over-year, with a total of $149 billion in sales activity for commercial properties and portfolios $10 million and greater, according to Real Capital Analytics.
According to Institutional Real Estate, Inc.’s FundTracker database, 122 funds raising $101.5 billion in aggregate closed in 2015, versus 120 funds that raised $88 billion in 2014.