New York has dethroned London as the city that attracts the most commercial real estate investment in the world. But the UK capital remains the favoured choice for overseas investors, according to Cushman & Wakefield's Winning in Growth Cities’ report unveiled at Expo Real in Munich.
New York has dethroned London as the city that attracts the most commercial real estate investment in the world. But the UK capital remains the favoured choice for overseas investors, according to Cushman & Wakefield's Winning in Growth Cities’ report unveiled at Expo Real in Munich.
The report shows that New York saw a 165% increase in property investment in the year to Q3 2011. The investment bounce helped what Cushman & Wakefield describes as the US 'mega city' to remain the top investment location title for the first time since 2007.
This reflects a flood of investment into commercial property markets in core global cities. As volatility is returning with a vengeance to financial markets and uncertainty about the global economy is widespread, investors are continuing their 'flight to quality' and are looking for safe opportunities in mature, regulated markets, according to the report.
The ‘Winning in Growth Cities’ report identifies the largest and fastest-growing cities in terms of commercial real estate investment, the difference in pricing, as well as demand and activity within individual sectors. The report is based on estimates for the year to Q3 2011.
The top 25 cities overall saw investment volumes rise 48% in the year to Q3, marginally ahead of the wider market which saw a 41% gain. As a result, market concentration has increased, with the top 25 commanding a 54% market share compared with 52% in 2010. The office market was the dominant sector, taking a 40% share of the total volume, followed by retail (25%) and industrial (11%). ere was little change in the top 25 ranking with the top nine cities remaining the same as those in last year’s ranking, although they have swapped places.
The European cities in the top 25 for real estate investment are: London (2); Paris (4); Stockholm (16); Moscow (20); Berlin-Brandenburg (21) and Hamburg (24).
Michael Rhydderch, head of EMEA capital markets at Cushman & Wakefield, said, ‘In the short term investors are likely to stay close to prime core assets, but with supply scarce and prices for the best stock high, we will see more adventurous buying plans emerging next year. However, even if the gap between prime and second tier cities does close next year, the gap between prime and secondary grade property will if anything move out further.’
