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The value of commercial real estate held by investors grew by 5 percent last year, hitting a new global record of US$13.6 trillion, DTZ revealed in its 41st annual Money into Property report.
According to the report, from the three regions that contributed to the global growth—Asia Pacific, North America, and Europe—Asia Pacific recorded the strongest annual growth as stock grew by 10 percent to US$5.1 trillion. The increase in the region was led by China which rose by 21 percent in dollar terms. DTZ said “The growth of stock in China was so significant that, when excluded, Asia Pacific rose by just 1 percent.
North America’s stock grew by 5 percent to US$4.2 trillion, and now closed the gab between Europe where stock remained at US$4.4 trillion. DTZ noted that while the stock in Europe was flat in dollar terms, “Europe’s performance is masked by currency movements, and in Euro terms, stock in the region grew 2 percent.”
Breaking down growth, equity continues to replace debt as a global source of capital. This resulted to debt as a percentage of total stock declining further, falling to 55 percent compared with 56 percent the previous year.
“The equity component of stock rose by 8 percent during 2014, driven by private equity, whereas debt was more muted and was up by just 2%. As the market continues to de-lever, those markets with relatively lower leverage levels have benefited from stronger growth, particularly Asia Pacific,” said DTZ Head of Capital Markets Research, Dr. Nigel Almond.
Meanwhile, global investment volumes reached US$633 billion in 2014, posting a 20 percent increase from the previous year. The growth was seen in all three regions which was led by Europe with 32 percent increase. “The momentum has continued into 2015, with global volumes in the twelve months to end Q1 2015 reaching US$653 billion,” DTZ said. It also expects global investment activities to reach US$771 billion, just short of the US$791 billion recorded in 2007.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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