Global real estate investments will rise in 2016, but investors plan to park that capital in safer assets, according to a new report from CBRE released Thursday.
The global investment manager said it expects real estate investments to total more than $1 trillion in 2016, up about 6 percent from 2015, according to the CBRE Global Investor Intentions Survey 2016. Despite market volatility during the January to February survey period, when China’s economic outlook made some investors skittish, 82 percent of investors said they will increase investments or keep volume stable compared with last year. By comparison, the 1,250 investors surveyed were more optimistic at the start of 2014, when 93 percent of investors reported that they planned to increase buying activity or keep it the same.
“This is not indicative of widespread concern about the short- or medium-term performance of real estate as an asset class,” said the report. “More likely, it reflects some concerns about pricing, the direction of US interest rates and current volatility in equities.”
Some investor sentiments remain largely unchanged from recent years. North America continues to be the most popular destination for investment, with almost half of investors reporting that they prefer the continent’s stability and core cities in particular. In the US, investors picked Los Angeles, New York and Dallas as the best destinations for capital in 2016. London topped the list for Europe again, and Sydney and Tokyo took top prizes for Asia Pacific. Within the asset classes, office remains the most popular type of investment. Retail, multifamily and logistics properties tied for the second most-popular property type.
“Investors continue to find real estate appealing, chiefly due to the relatively higher returns and stability on offer,” said Chris Ludeman, CBRE’s capital markets global president, in a statement Thursday. “Not surprisingly, 2016 looks likely to be a ‘risk-off’ year, with investors reporting they are more focused on core assets and less likely to seek secondary, value-add and alternative opportunities.”