C&W: Global RE set for 7-year record in 2014

The property services firm has predicted that 2014 investment volumes will surpass $1trn for the first time since 2007, with the Americas leading in terms of growth and Asia leading in terms of volume.

The global property market in 2014 is expected to reach a seven-year high, surpassing $1 trillion for the first time since 2007, according to a recent research report by global property services firm Cushman & Wakefield (C&W).

The anticipated $1.1 trillion in real estate investments would represent an approximately 12 percent increase on 2013’s investment volumes, and the report added that volumes could actually increase by as much as 15 percent. It said 2013 showed year-on-year growth of 8.4 percent for a total $978 billion of investments.

“The growing level of optimism and activity…has its roots in a belief that the global economy is set for calmer waters ahead and that financial imbalances are on the mend,” C&W head of EMEA research David Hutchings said in the statement. “This is leading to an increase in risk appetites which is manifest in a push to invest across borders, a move towards second tier assets and a narrowing in the prime to secondary yield gap.”

The pace of growth has been greatest in the Americas, surpassing 20 percent in 2013 and is expected to remain between 18 percent and 20 percent this year. However, in terms of the sheer value of real estate investments, Asia-Pacific is forecasted to lead the charge for the sixth year in a row.

Overall, Asia Pacific is expected to reach $466 billion in real estate investment volumes, up from $439 billion in 2013, or a year-on-year growth of 5 percent to 7 percent. However, C&W also predicted that the region’s investors would be “highly polarized.”

The firm said investors in core markets like Australia and Singapore have come to accept lower returns as “the new normal,” but are now happy to invest in assets for the longer term, according to John Stinson, C&W head of capital markets in Asia Pacific. “Those with shorter term or higher return horizons, however, are ready to make sales in the core space to redeploy their capital to higher growth sectors and geographies.”

“Emerging Asian markets are therefore likely to be busier next year with Manila, Jakarta and [Bangalore] offering great potential,” he added.

At the same time, Asian institutional investors are also expected to export capital both within Asia and to other regions at an increasing rate. Core products in the core markets of other regions seem to be at the “top of the agenda” for now, the report said.

Cushman is best known for its property services but, like its rivals CBRE and Jones Lang LaSalle, it owns a property investment management business, Cushman & Wakefield Investors. The Europe-focused platform manages more than €1.2 billion of assets, predominantly in London, Frankfurt and Paris.