Apr 11, 2012
According to the 62-country latest research, “Investment Atlas 2012” from Cushman & Wakefield, an improvement of the activity is expected in the second half with a potential 20%-growth of the investment amounts compared with the 1st half. This prospect is “driven by an increased confidence and a release of pent-up investor and tenant demand”. In 2012, total global investment, excluding the residential sector, is expected to be at the same level as in 2011 at $ 710-720 billion. Recovery being tied to growth, real estate will remain a safe investment even if this confidence remains low or if a new crisis emerges, as investors will still look for secure incomes. Evolution of users’ demand, looking for spaces better answering to their activity needs, remains a notable vehicle of the market, as they seek to streamline and expand their property to grow in new markets, cut their occupation costs and better take sustainability and technological changes… into account. As investors are looking for security and growth this year, gateway cities will be highly demanded in all sectors of the globe. Some will take more risks and others will reevaluate them.
In 2011, the Asia-Pacific zone registered a 26%-growth of the investment volume in commercial real estate and 42% in industry, offices and hotels remaining stable. These trends are expected to continue in 2012 especially in Japan, Hong Kong and Singapore for industry and in China or Korea for retail. The Seoul market attracts investors by its growing supply of modern retail centers, which have been in short supply. China continues attracting investors in many sectors: Shanghai and Beijing for offices and major cities and tier 1 locations or tier 2 cities such as Chengdu for investments in mid to high-end retail malls. America and more precisely United States look likely to see higher growth. In the U.S., investors would be more interested in second tier markets, giving a greater place to the prime assets in secondary cities. They will continue to look for well located industrial and retail properties that enjoyed confidence since 2011.
Mexico offers great opportunities in prime retail, office and industrial investments. Brazil is expected to continue attracting this year thanks to its positive economy and the middle class development. Industrial and commercial real estate continue to attract investors looking for a stable growth and capital appreciation, while keeping in mind tax and currency risks. Europe/Middle East and Africa offers a wider choice for cautious investors. Poland still sits in the first position among the privileged destinations of the region. Seeking higher returns, investors will need to look towards Russia and Turkey, two countries whose growth is now booming.
Even if economic growth is still slow, France and United Kingdom “offer a fair growth in the medium term and higher return potential in assets development”. London remains number one by its market importance and the Olympic Games prospects. Now, low risk investors may focus on Germany and the Nordics. France registered an investment volume of € 16.5 billion in 2011, up 50% from 2010, helped by the abrogation of some fiscal advantages helping investors to sell their assets and to enjoy from fiscal incentives. Growth was also supported by an aggressive rental market and by the statute of the real estate as a safe value. If 2012 growth is forecast to be weaker, it will be driven by continued investments in property. In addition, the closure of some German open-ended funds might create new opportunities for some investors.
