Over three quarters of property investors in EMEA plan to increase real estate weightings in the region in 2015, according to the benchmark 2015 Global Investor Sentiment survey from property advisors, Colliers International. The survey found that the investment strategy of 78 per cent of EMEA-based investors was to grow their portfolios in the region in the next 12 months, up from 61 per cent last year; a sentiment matched by 67 per cent of investors globally.
Over 600 global investors, from sovereign wealth to private equity firms across the United States, Canada, Latin America, Asia, Australasia, Europe and the Middle East, gave Colliers their outlook at a global and regional level for 2015 and beyond. The results highlight a number of key global indicators, including 30 and 28 per cent of investors from Asia and US respectively expressing an interest in investing in EMEA.
Also setting their sights on EMEA as a global investment destination were Canadian investors; 71 per cent of Canadian respondents plan to invest in EMEA in the next 12 months.
“The 2015 Global Investor Sentiment survey was revealing; low interest rates have heightened the appeal of real estate to global investors as a particularly attractive asset class, which has grown global capital to unprecedented levels. European institutions in particular have now started to show signs that they are back and very competitive in core markets where Asian and North American capital has dominated over the past few years, expanding in both their home countries and across borders in 2015.” said Richard Divall, Head of Cross Border Capital Markets, EMEA at Colliers International.
“Looking at oversees capital entering the region, whilst London is the gateway to Europe, there are signs of this changing, with Asian capital now focusing not just on London, but tier one cities in Europe including Munich, Frankfurt, Paris, Madrid and Rome.” said Divall. “Total EMEA investment to volumes stood at €128 billion to Q3 2014, up five per cent on the same period in 2013. We expect a strong Q4 2014 and for investment volumes to continue increase in 2015.”
Other key findings of the survey were:
- Two thirds of EMEA investors plan to take more risks in the future to achieve returns. Whilst they are among the most risk averse globally last year (with only 33 per cent looking to take more risk), investors in Europe, the Middle East and Africa are now exhibiting a far greater risk tolerance, whereby 66 per cent plan to take more risk in the future to boost returns above the global average of 59 per cent.
- In their home region, in addition to London, EMEA investors will be looking mainly at Germany’s “Big Six” cities, with Berlin appealing to many at investors (22 per cent), as well as Paris (16 per cent), Madrid (10 per cent). However, Colliers is also reportedly seeing increasing levels of EMEA investors looking to expand in the US particularly New York (18 per cent) and Asia-Pacific, China and Australia.
- Shopping centres are set to become increasingly desirable, moving up two places in the table of preferred sectors to compete with offices as the preferred investment class in the region. Advantages of quantum in this sector is perhaps one reason behind this, enabling larger institutional funds, with minimum spend requirements, to get the desired level of exposure and the return of debt to finance acquisitions. However, the key is investing with a strong local partner
- Debt is also set to play a bigger role in real estate investment in 2015, as a greater share of EMEA respondents—particularly Middle Eastern investors—plan to use it to leverage purchases (72 per cent, up from 59 per cent last year).
- Whilst some perceptions about investment conditions in Europe are less positive due to political uncertainty, particularly as a result of recent developments in Ukraine and Russia, the impact on real estate investment is localised. A majority (52 per cent) expect property investment conditions to deteriorate, despite active investor interest across the remainder of the CEE territory so far in 2014, and high investment volumes in Poland and the Czech Republic (both set to at least match 2013 volumes this year). Tier two markets such as Hungary, Romania and Serbia are also set to out-perform 2013 investment levels. Colliers’ prognosis is for an even better year in 2015.