Despite geopolitical uncertainty and a slowing in the economic cycle, investment in the global property market has seen a significant rise of 18% year-on-year to a new record high of $1.8 tn (€1.57 tn), according to new research from Cushman & Wakefield.
The 18% increase in commercial real estate investment is being led by Asia, both as a source of capital and as an investment destination, with investment in Asia accounting for 52% of all activity and Asian buyers responsible for 45% of all cross-border investment.
Carlo Barel di Sant’Albano, 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.'
David Hutchings, head of investment strategy, EMEA capital markets at Cushman & Wakefield and author of the report, commented: '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.'
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, added Hutchings.
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 strongly to take fourth spot ahead of Hong Kong. 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.
Despite political uncertainty surrounding the nature of the UK’s exit from the European Union, London has retained its position as the primary European market, owing in particular to a number of high-profile office transactions.
The UK capital is also the top city for attracting international real estate investment, for the ninth time in 10 years. Having increased transaction volumes into London by 47% over the year to $10.9 bn, Asian investors are the strongest source of cross-border capital into the city, with offices the overwhelming target for these deals, as the sector attracts a 94% market share of APAC flows into London.
Europe accounts for four of the top 5 spots for international capital, with Paris and Amsterdam retaining third and fourth place for the second year and Madrid making the top five for the first time since 2009. The only German city in the top 10 is Berlin, marking a change from the country’s dominance in 2017 when three cities appeared, the most it has ever had. However, German cities continue to see very buoyant levels of demand and maintained a healthy representation in the top 25 city targets for cross-border investors.
