Singapore, December 22, 2015 – Leading global commercial real estate services firm, Colliers International Group Inc.’s (NASDAQ: CIGI; TSX: CIG) has released its Global Investor Outlook for 2016, a survey report which reveals that 48 per cent of the Asia Pacific investors surveyed were optimistic that investment volumes in the region are likely to increase in 2016.
The Global Investor Outlook for 2016 is a survey conducted by Colliers with more than 600 investors – including private equity, property companies, REITs, funds, institutions and sovereign wealth funds – across the risk spectrum from the Americas, EMEA and the Asia Pacific regions.
According to the survey, 91 per cent of Asia-based real estate investors intend to invest in the Asia Pacific region in the next 12 months. Asia investment volumes in the first nine months of 2015 were slightly higher over the same period last year, with USD40.2 billion transacted across all asset classes, compared with USD37.1 billion in 2014.
In fact, the growth potential of Asia Pacific as a destination for offshore capital continues to be strong, with about 15 per cent of global investors looking at investing in the region.
Mr Terence Tang (鄧文傑), Managing Director of Capital Markets and Investment Services | Asia, Colliers International, says, “We believe that investment volumes in Asia Pacific for 2016 are set to outperform 2015. While the equities market volatility has led to a more cautious approach in China, we do not think that there will be any significant drop in real estate investment activities; that is, unless the country’s economy suffers a drastic downturn, which I believe is unlikely. We anticipate yield improvement in some Asian Markets and the lower cost of debt in China will continue to support the return of capital into the Asian real estate markets.”
Mr Tang continues, “Looking specifically at Singapore investors, those who are searching higher yields may be lured back to Asia due to favourable fundamentals and more attractive asset yields in Asia. The dearth of suitable opportunities and lower asset yields offered in the key Western markets may further entice some Singapore investors back to Asia to seek for better returns.
“However, some Singapore investors may also consider investing in tier-two European cities, such as Cologne and Munich in Germany, Manchester City and Birmingham in the United Kingdom and less popular cities, such as Adelaide in Australia, where higher yield assets can still be found.”
Six key trends that will shape commercial real estate investment in Asia Pacific for 2016:
- 50 per cent of Asia Pacific investors are expected to increase their real estate portfolios in 2016, a sign of continued confidence.
- Australia and Japan are global investors’ preferred destinations in Asia Pacific, with the key investment locations being Tokyo, Sydney and Melbourne. Hong Kong, Shanghai and Singapore follow thereafter.
- Joint ventures between domestic players and overseas capital will remain a mainstay of the Australian investment market. It will be a growth area in New Zealand.
- The lower cost of debt will be a main driver of investment activity in New Zealand.
- CBD offices will be the preferred investment sector for Asia Pacific investors, followed by development opportunities, and industrial and logistics.
- There will be more motivated sellers in 2016, which will create more varied opportunities for investment.
On a global scale, investor sentiment towards real estate is similarly tipped to remain positive.
Transactional activity in the first nine months of 2015 confirms this assessment, with USD623 billion of direct property investment worldwide, representing an 11 per cent increase over the same period of 2014.
Mr John B. Friedrichsen, Chief Financial Officer of Colliers International Group Inc., says, “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. Our survey report suggests that 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.”
Six key themes that will shape commercial real estate investment worldwide for 2016:
- Real estate continues to grow its appeal. The US will be a preferred destination for global capital.
- Liquid markets are still preferred. Global gateway cities – such as London, Paris, New York, San Francisco, Tokyo and Sydney – remain the primary target for global cross-border investors over the next 12 months.
- There will be a greater emphasis on secure income and asset management to drive performance in 2016.
- Risk appetite will be moderated, with international investors remaining confident.
- More global investors will partner with local expertise and acquire platforms as means of placing substantial amounts of capital with confidence.
- More investors will use debt to finance their acquisitions, despite the threat of increased interest rates in some territories.
For details, the full Colliers International Global Investor Outlook 2016 is available for download at http://GIO.colliers.com