Global investment in real estate reaches $1.8trn

Investment in global real estate markets has hit a record of $1.8trn (€1.57bn) over a 12-month period, according to Cushman & Wakefield.

The agency’s Winning in Growth Cities report said the figure, which covers the 12 months to June 2018, was a year-on-year increase of £300bn.

According to the report, the performance was led by Asia, both as a source of capital and an investment destination, the research revealed. Investment in Asia accounted for 52% of all activity and Asian buyers were responsible for 45% of all cross-border investment.

Carlo Barel di Sant’Albano, the head of global capital markets at Cushman & Wakefield, said: “There is no shortage of capital targeting real estate across myriad geographies and risk profiles. Indeed, we are seeing many investors increasing their allocations to real estate and they are evolving their strategies to allow for variable supply and risk tolerances.

“These are the key factors determining whether volumes rise further still; given the current environment, volumes could exceed current levels by up to 2% next year. This is likely to be led by global buying, but investors need to keep a close eye on structural shifts in the occupational market as both an opportunity and a challenge.”

David Hutchings, the head of investment strategy for capital markets in EMEA at Cushman & Wakefield and author of the report, said: “There are clear, and many would say growing, risks in the macro environment, but there is little to suggest the cycle is set to end or that a recession is looming.

“Inflation is proving to be less of a threat than feared as we continue to enjoy steady economic growth.”

Hutchings, however, said price signals will be enough to keep central banks in a tightening mood in most areas and the slow but sure rise in interest rates, and reduction of quantitative easing driven liquidity will therefore continue.

“What may be new in the year ahead is the potential for supply to increase as some switch strategy and take profits, others get caught by rising borrowing costs and a need to raise capital, and more seek out partners to jointly invest and develop.”

At a city level, New York remains out in front as the largest real estate city market in the world, followed by Los Angeles and London, with Paris rising to take the fourth spot ahead of Hong Kong, the report revealed.

Among international buyers, London remains unassailable, with New York slipping from second to sixth place thanks to high pricing, the strong dollar and keenly competitive local demand.

The strongest Asian market is Hong Kong.

 

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