Globally, there is set to be a 50% surge in investment into commercial real estate in the second half of the year, predicts Colliers International in its new Global Capital Markets 2021 Investor Outlook paper. In EMEA, the momentum continues in the industrial and logistics and living sectors which are less dependent on economic growth. Investors are also particularly interested in core office stock, albeit selectively, with some 32 per cent of respondents looking to invest in the sector.
“Based on our global analysis, which gives us a bird’s-eye view of investors’ interests and expected appetite, longer-term tailwinds in the property sector remain intact. With a massive volume of equity raised globally and the need for real assets, investors are eager to deploy pent-up capital and pursue opportunities during the year,” said Tony Horrell, Head of Capital Markets | Global at Colliers International. “We expect to see movement up the risk curve this year, with investors exploring all types of assets from senior care homes to public infrastructure projects.”
The increased confidence in the global property market will come from the recent vaccine developments, geo-political stability and continued government stimulus. The report combines analysis and views from nearly 300 respondents including major institutional investors, listed property companies, sovereign wealth funds, private equity funds, family offices and third-party money managers.
The report indicates that 98 per cent of investors across all regions aim to expand their portfolios, with approximately 60 per cent looking to expand by more than 10 per cent. Furthermore, 67 per cent of survey respondents in EMEA are planning their next investment in the first quarter of 2021.
Kevin Turpin, Regional Director of Research, CEE adds: “It is interesting to note that despite the challenges faced by many investors in getting to physically see or inspect assets, and deploy capital in 2020, the CEE region closed out the year with a remarkable volume of above €10 billion. Although this represents a YoY decrease in volumes by ca. 26% (EMEA volumes -30%, preliminary), it only confirms our view that capital will return in force as soon as the vaccines and markets settle during 2021”.
The CEE region and individual country markets cater for a wide range of investment strategies, with opportunities on offer from single assets and portfolios, to platforms and joint ventures.
Across EMEA, offices remain the most sought-after asset class with respondents citing office properties in major cities such as London as Munich the most attractive prospect. This was particularly evident with overseas capital, with the highest number of overseas investors planning to invest in London and Frankfurt offices.
Luke Dawson, Managing Director and Head of Capital Markets, CEE adds: “When it comes to the CEE capital cities Warsaw continues to keep its leading position with the office market having recorded almost €1.3 billion in transactions throughout 2020. In 2021, we expect to see some spectacular transactions as a number of opportunities close or commence marketing”.
“We have been saying that real estate investment is a very attractive asset class for a while. This report is a great confirmation that almost all investors expect to increase the size of their portfolios. This also reflects the situation in our local market. Moreover, supply is so limited here (in all sectors and sub-sectors) and demand is so strong that we see continued pressure on pricing for most assets. We still expect that an investment bought at today’s asking prices will look like an excellent buy in the relatively short-term – in the next one or two years – just as has happened in the last few years. Offices (as also confirmed by the very recent purchase of Parkview by DEKA), residential and logistics are the most attractive sectors here too, but we are also registering interest for manufacturing, retail, hotels and other sectors,“ said Andy Thompson, Head of Investment, Colliers International Czech Republic.
“As evidenced in the better half of 2020, investors are putting more focus on sustainability and efficiency issues when it comes to underwriting deals. Some part of the older and ineffective office stock, combined with slower leasing of the new pipeline estimated at 160 000 sq m will push the vacancy level considerably above the double-digit mark. The importance of key locations and stability of underlying cash flow is ever-increasing. The true winner of the pandemic is the warehousing and logistics sector in large with strong growth in values on the back of excess demand. The retail sector’s performance is rather divided and unbalanced. Whilst the typical shopping centres and high street retail have been struggling; supermarkets, strip malls and other specialised stores are delivering solid results, hence commanding strong liquidity," added Bence Vécsey, Director, Head of Capital Markets at Colliers International Hungary.
Additional key takeaways from the Colliers Global Capital Markets 2021 Investor Outlook report include:
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