US$1.7 trillion spending spree for global real estate

US$1.7 trillion spending spree for global real estate

14 April, 2017

Global investors have US$1.7 trillion of cash to splash on property in 2017, reports The Sydney Morning Herald.

Citing the 2017 CBRE Global Investor Intentions Survey, the paper reveals that investors have strong motivation to invest in real estate due to its relatively high income yield.

In 2016, the top motivation for investors—37 percent of responses—was the expectation of higher growth compared to other asset classes. This year, however, most investors—30 percent of respondents—said they were looking for better yield compared to other asset classes.

North America is ranked as the preferred region for investors, with London, Los Angeles, and Sydney the most popular cities in each of the major regions.

In the Asia-Pacific region, Sydney is once again the top destination, with Tokyo and Melbourne also rating well. Australian cities remain highly popular with APAC investors because of their liquidity, transparency, and positive long-term prospects. Seoul has dropped out of the top six and Hong Kong has moved in.

Office is the preferred sector for investors, by 26 percent, with logistics a close second at 22 percent.

CBRE Global President Capital Markets, Chris Ludeman, said that last year investors were “reeling from the volatility in world stock markets, [but] now they are seeing equities reach record highs and economic sentiment is positive.”

“Although there is uncertainty about the direction that economic policy will take, there is also a growing anticipation that changes will unlock growth,” said Mr Ludeman.

“While there are some clouds on the horizon—emerging market debt looks problematic as does Greece’s financial situation—economic momentum, alongside the yield advantages of property as an asset class, should ensure another year of substantial capital flows into global real estate,” he said.

Despite a volatile global political environment, the report said investors were relatively unconcerned about global or local politics, preferring to focus concerns on undefined ‘global economic shocks’ and ‘faster than expected rises in interest rates’.