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Sentiments among global real estate investors remains strong intentions to expand their existing commercial portfolios, according to new research.
In CBRE’s Global Investor Intentions Survey 2015, the appetite for cross-regional investment is noted to be increasing, and more investors intend to deploy capital outside their own region during 2015.
Despite strong liquidity in the investment market, investors are concerned about the intense competition for assets. Pricing was identified as the biggest obstacle to making acquisitions, according to the report. Worries continue surrounding economic weakness, but there are encouraging signs of recovery in the U.S. and sustained growth in Asia, according to CBRE.
Tighter yields in most markets are prompting investors in EMEA (Europe, Middle East and Asia) and North America to place a stronger emphasis on value add and opportunistic investments for higher returns.
In contrast, investors in Asia-Pacific intend to increase their focus on acquiring core assets. This trend is partly due to the increased participation of long-term low risk-tolerant institutional investors both from Asia and internationally.
The survey suggested that in the coming year investors are likely to rebalance their portfolios and switch from market sectors that are perceived to be overpriced.
Second tier and smaller cities are gaining popularity, but London remains the preferred city. Offices are the favoured asset class whilst retail is lagging. Alternative property sectors such as student living, healthcare and retirement homes are seeing stronger interest.
Overall, the mood among investors remains upbeat and buying demand will exceed selling pressure.
CBRE said that it believes 2015 will be another strong year for the global real estate investment market, with capital flows expected to increase by between 10 percent and 15 percent, it concluded.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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