12-01-2016 - More than half of investors plan to increase real estate allocations within multi-asset portfolios, according to a major new report by Colliers International. The Global Investor Outlook (GIO) for 2016 survey shows that 52% of multi-asset investors plan to increase their allocation to property. 36% plan to make no change, and only 11% plan to reduce the allocation. Private equity funds (63%) and Property Companies including REITS (61%) and institutions (51%) all plan greater allocations in 2016. Of the total global investment volume, American based investors represent 61%, EMEA 53%, and Asia Pacific 43%.
Global institutional fund allocations to property according to published IPE data: 2013 (8.9%), 2014 (9.4%), 2015 (9.6%), 2016 (9.9% forecast). Assuming global funds under management of around $36 trillion, the increase in the last two years has been $233 billion. This is 28% of total global direct property investment to around $850 billion (RCA). Given this existing weight of capital and given further increases in allocations, if all of this money found a home in property, it would push direct transaction volumes to well beyond 2007 levels to over $1.2 trillion.
Investors turn to Europe for greater value
European volumes are expected to increase further in 2016 driven by a variety of prime markets and attractive lending conditions. However, fewer investors expect to be net buyers. US investors remain committed to Europe, with a third of them planning to invest in EMEA during the next 12 months.
This is being particularly driven by opportunity-led American private equity, which is shifting from UK to continental Europe because it can achieve higher returns.
Investors from outside EMEA will typically have more of a narrow focus around London, Paris and the key German cities, with Madrid also on the radar. Asian capital will continue to focus on London and German cities in 2016, underscoring investors’ reduced appetite for risk.
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John B. Friedrichsen, Chief Financial Officer at Colliers International, said: “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.”
The Colliers Global Investor Outlook (GIO) report can be downloaded here.
Check out the video highlights or visit the microsite at http://gio.colliers.com/.