Last year saw a record $600 billion (€434 billion) in global real estate investment, according to DTZ’s annual Money into Property report released earlier this summer.
The report also found that the amount of investors below their targeted real estate allocation increased to half in 2006, up from a third in 2005.
In an interview last month with Australia television program Lateline Business, Joe Valente, DTZ’s head of global research, said it is difficult to place capital in the current market.
“As an industry I think we’ve come a long way in terms of being able to place capital in the market, but it’s not like equities or indeed the bond market. It’s much more difficult to actually place capital in an efficient manner,” he said.
“Even though we’ve made an improvement, 50 percent of capital that’s been raised over the course of the last two years is still standing on the sidelines wanting to join the game,” he continued. According to the report, there is currently $4 of capital chasing every $1 of property assets.
Real estate-related global capital flows amounted to $860 billion last year, an increase of 5 percent from 2005, resulting in a capital market of about $9.6 trillion.
Private capital continues to be the main driver behind growth in the real estate market, with US, Australian and Middle Eastern investors playing a large role. DTZ estimates that investors are currently looking to invest $2.4 trillion in real estate globally.