Asia, 22 December 2015
— Colliers International Group Inc. (Nasdaq:CIGI) (TSX:CIG) has released its Global Investor Outlook for 2016, revealing that investor sentiment toward real estate is projected to remain positive globally. Primary target markets will continue to draw the most interest, with moderating risk appetite, stable economic conditions, and low interest rates driving increased investment in secondary markets. Transactional activity in the first nine months of 2015 confirms this assessment, with $625 billion of direct property investment worldwide, representing an 11 percent increase over the same period of 2014 (Real Capital Analytics).
“Our global analysis in this report gives a unique macro-view, providing a comprehensive look at the health of the economy as well as in-depth views of market sentiment that serve as a useful bellwether for local markets worldwide,” said John B. Friedrichsen, chief financial officer, Colliers International. “Our report suggests that the days of ‘pass the parcel’ are over, and long term secure investment in core markets will be the norm. At the other end of the risk spectrum, large volumes of capital already raised will increasingly seek out opportunities in tier-two cities and recovering markets,” he added.
Specific to the Asia market, policy changes in the Chinese real estate market and the US interest rate hike are likely to influence investors’ business strategy, although the the impact of the Fed raising US interest rates will not be severe as investors are well prepared. With investor confidence remaining high and the majority of investors looking to continue to expand their portfolios, investment volumes in Asia-Pacific are likely to continue to increase in 2016, a thought shared by 48% of investors from the region.
“While the equities market volatility has led to a more cautious approach in China, we do not think there will be any significant drop in real estate investment activities, unless the country’s economy suffers a drastic downturn, which I believed is unlikely,” said Terence Tang, managing director, Asia Capital Markets & Investment Services. “We anticipate the improving of yields in some Asian markets and lowering cost of debt in China will continue to support the return of capital into the Asian real estate markets. We believed investment volumes in Asia-Pacific in 2016 are set to outperform 2015.”
Six key themes for Asia Pacific include:
1. Australia and Japan primary targets: Australia and Japan are global investors’ preferred destinations in Asia-Pacific, with the key investment locations being Tokyo, Sydney and Melbourne.
2. Domestic and Overseas Capital remain a mainstay: Joint ventures between domestic players and overseas capital will remain a mainstay of the Australian investment market and will be a growth area in New Zealand.
3. Cost of debt a main driver: The lowering cost of debt will be a main driver of investment activity in the region.
4. CBD offices will be the preferred investment sector: CBD offices will be the preferred investment sector for Asia-Pacific investors, followed by development opportunities and industrial and logistics.
5. More motivated sellers: 2016 will see more motivated sellers, which will create more varied opportunities for investment.
6. 50% expect to increase their portfolios:
Asia-Pacific investors remain confident and 50% expect to increase their portfolios in 2016.
For more details, the full Colliers International Global Investor Outlook 2016 is available for download at http://GIO.colliers.com