March  2010  VOL.3

Investment Notes

Global investment volumes are forecast to rise 30 percent this year, hitting $478 billion, according to Cushman & Wakefield’s 2010 Global Investment Atlas, which monitors investment flows in commercial property in 56 countries.

“While challenges clearly remain and a double-dip cannot be ruled out, a higher risk appetite among financiers and investors will continue to fire the market,” says David Hutchings, head of EMEA research for Cushman & Wakefield.

The reviving U.S. market will lead investment, the report says, and the investment total is likely to be even higher if the economic recovery remains on track. In 2009, global investment volumes fell 23 percent to $365 billion, their lowest since 2003. However, as markets started to recover and global liquidity improved, investment volumes ended the year on a much stronger note – rising 104 percent between the first and second halves of the year.
 
The upturn was led by the Asia Pacific region, most notably China, with a 39 percent increase in investment in 2008. China is now the largest real estate investment market in the world, according to the report. The UK is the second most dynamic recovery market, while the United States moved to third place. (If apartment sales are included in this figure, the United States would take second place.)
 
Yields stabilized in most areas late last year as higher investor demand and limited supply impacted pricing. The global average fell 20 basis points in the second half of 2009 to 7.8 percent and a further fall of 25 to 50 basis points is forecast for 2010.
 
With investment growing 143 percent last year, it is China that is now the most active property investment market in the world. Aside from the rise of China as a global market, the increasing dominance of Asian Pacific overall has been notable in the 2009 results. Eight of the world’s top 20 investment markets are now Asian Pacific and a number of them rose up the rankings last year, with Hong Kong, Taiwan and New Zealand seeing deal volumes rise while Australia and South Korea saw a much more modest decline than the global average.
 
Many investors are focusing on core, more liquid markets such as the UK, France and Germany in Europe, or eyeing Canada now and perhaps the United States later this year.