Global Investment Property Volumes To Surpass $1 Trillion In 2014; Asia Polarises - Report

Tom Burroughes

6 January 2014

The global property investment market will pick up momentum in 2014 but the Asia-Pacific market will polarise, with more developed countries seeing relatively modest performance while newer economies will produce more stellar gains, according to Cushman & Wakefield, the property firm.

For the Asia-Pacific region as a whole, the company expects a rise in trading activity of between 5 and 7 per cent this year, after a modest 1-2 per cent gain in 2013.

Within the region, however, there will be a contrast between developed and emerging Asia, according to John Stinson, head of capital markets in the region at will be felt in emerging markets as liquidity drops. However it should also be taken as a reminder that investors need to stay focused on fundamental real estate drivers. In particular the mismatch between supply and demand must be understood, and this is both in terms of quantity and quality given the changes underway in what occupiers actually want,” Hutching said.

Americas
Volumes have risen most rapidly in the Americas but EMEA and Asia are both expected to pick up next year, with foreign players a key part of this. Cross border activity is already growing in all areas, to above 12 per cent in the Americas and Asia for example, but standing at over 40 per cent in EMEA and likely to rise further.

The America's have led the way once more for growth this year and look set to repeat this in 2014, with an 18-20 per cent increase forecast. The US is very much the engine for this, with Canada growing but held back by high prices and stock shortages while Latin America has seen a mixed picture, Cushman & Wakefield said.

"With leasing markets firming, the US has a smaller lag between occupational and investment cycles than most other markets," Rob Griffin, of the US capital markets team at Cushman & Wakefield, said.

"However while better recent jobs data is encouraging a more upbeat mood it is also bringing forward the start of tapering and a further increase in bond yields. Prime yields are therefore likely to largely mark time in the months to come but with more demand and financing, I can see secondary yields continuing to edge down as the recovery in jobs spreads out,” he said.

Looking to Latin America, while downside risks remain, the general prognosis is for the economy in most countries to be somewhat stronger which will be a positive for occupier demand across the region.

Europe
European property investment volumes are forecast to rise by 13 to 15 per cent in 2014; the recovery is deepening and with more regional and global capital being diverted towards property, there appears more upside than downside potential in 2014.

Geographically, the European market is broadening out, with opportunistic players leading the way in to what were previously overlooked areas in southern and eastern Europe, typically seeking core quality assets in large cities, the report added.

In total, global investment volumes will rise to $1.096 trillion this year, up from $977 billion in 2013 and $902 billion in 2012, the organisation added.