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Race for quality office assets in major cities spurred by ESG and limited supply

2022_global_investor_ouotlook

– 2022 Global Investor Outlook reveals

 

Investing with intent becoming as clear a priority as financial performance – globally and in the Baltic market.

 

Leading diversified professional services and investment management company Colliers reveals 67% of EMEA investors (and 60% of global investors) chose quality office assets in major markets as their top strategy picks. European cities like London, Paris, Berlin and Munich have retained their allure and will be in high demand next year.

The appeal of offices not only stems from the realization that demand for this asset is here to stay, particularly in cities supported by strong transport infrastructure and high amenity values, but also the ease of large-scale capital deployment that office assets represent. The rising cost of construction, viewed by 81% investors as a pain point, limiting new builds, renovations, and retrofit projects amplify the race to core, and investors expect the stark imbalance between demand and supply will see core office values increase by up to, or more than 10% over the next 12 months.

“For the Baltic market property availability remains one of the main issues especially as most of the investors are in a buying mood. In the first 3 quarters of this year Baltic investment volume already exceeded EUR 1 billion – a threshold previously achieved in a year. Similar to overall trends, the investors’ interest for industrial and residential sectors has increased also in the Baltics, while the largest investment volumes still come from retail and office sectors,” says Angela Kolesnikova, Head of Investments at Colliers in the Baltics

This year’s report shows ESG (environmental, social, governance) considerations are prominent, with nearly 3 in 4 investors integrating environmental factors into their strategies. This desire to invest with intent is both a means of future-proofing their assets and responding to stakeholder and societal pressures requiring them to respond to the climate crisis.

The pandemic introduced new risks and heightened others for certain real estate assets. Investors are looking for more ways to ensure their portfolios are resilient and diversified, exploring specialized assets such as data centers, life science facilities, affordable and student housing that benefit from their strong ties to demographic and societal trends.

 

Other key findings from the Colliers 2022 Global Investor Outlook include:
  • Top three assets of choice include industrial & logistics, which is still unsurprisingly the top asset of choice, with 69% of respondents most likely to invest in this asset in 2022, followed by 57% in offices and 40% in multi-family.
  • Europe’s hotel sector is once again on the investor radar thanks to a nascent revival of travel and tourism. But labour shortages have made the return of some hotels difficult. Repurposing hotels remains a trend that is attracting value-add players.
  • Investors expect price increases in luxury retail, convenience and food-anchored assets. Traditional shopping centres will likely undergo a period of transition, with the repositioning of department stores a potential prelude to near and mid-term trends.
  • Alternative segments attracting the most attention in Europe are life sciences, student housing, affordable housing and data centres. Life science market in Europe lags the U.S. and the data centre market is less mature compared to Asia, which can make it difficult to secure income-producing assets at scale.
  • The office locations of choice are London (45%); Paris (30%); Berlin (30%); Munich (30%). Investors are looking at offices as a potential area where they can see returns versus the market.
  • The survey shows multifamily assets gaining appeal, particularly among investors in the Nordics and Southern Europe. Traditional homeowners’ markets such as Poland are attracting significant interest as social and economic trends point to more people renting.

 

About the Colliers 2022 Global Investor Outlook

The second edition of our annual outlook for global property investors is based on a focused survey undertaken by 300+ investors across the globe and in-depth interviews with our regional Capital Markets leaders. The findings and opinions featured in the report are shaped by their responses.

 

See the report >>>


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Experienced Marketing&Communications Manager with a demonstrated history of working in the financial services industry. Marketing professional with a MBA focused in Marketing, business management from RISEBA, MBA.

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