MIPIM 2018: winners and losers in global capital flows

Europe and Asia continued to knit tighter relationships, according to Cushman & Wakefield’s annual report.

Buoyed by mega-deals, Europe and Asia saw significant increases in cross-border investments from one region to the other last year, per research from this year’s MIPIM conference.

Overall, global real estate “performed exceptionally well in 2017,” said Cushman & Wakefield’s annual Global Investment Atlas, published in conjunction with the property event in France. Investment volumes jumped 13.2 percent year-on-year, to $1.62 trillion, and the property services company “anticipates a further improvement in 2018.”

For cross-border capital, bright spots included Asia-Pacific, which saw $118.3 billion of inbound capital, up 8.5 percent year-on-year. Europe was the main source of cross-border growth, and Cushman & Wakefield said it expected increased global demand in the region this year.

With the exception of Latin America, all regions boosted their exposure to Europe, which counted $173.7 billion in inbound capital last year, up 27 percent. Asia-Pacific led the way, with a 96.5 percent jump in year-on-year investment, largely thanks to China Investment Corporation’s €12.2 billion purchase of the pan-European logistics platform Logicor from Blackstone.

“As economic conditions continue to improve, Central and Eastern Europe will benefit from greater demand from the West as stock availability and the search for yield drives investors further afield,” Cushman & Wakefield said in its report.

Among the capital flow losers last year was the Middle East, which counted just $400 million in inbound investment, down 37 percent from last year, on the heels of strained diplomatic relations. The Americas also saw a double-digit percentage drop in inbound capital, down 24.8 percent year-on-year to $55.7 billion, “most notably because of a slowdown in Asia-Pacific and Middle Eastern investment.”

On one hand for the Americas, the US federal budget’s approval should elongate the domestic commercial real estate cycle, and good occupier performance should draw in investors, the report said. On the other hand, Cushman & Wakefield cited political tensions and rising interest rates as factors that could deter foreign investment.