2.2 trillion awaits global real estate investment

$2.2 trillion awaits global real estate investmentMore than $2.2 trillion of ‘dry power’ is available to deploy in real estate over the course of 2017, finds the latest CBRE Global Investor Intentions Survey.Investors have ample capital and a strong motivation to invest in real estate because of its relatively high income yield, the survey finds.While North America is the preferred region for investors, London, Los Angeles and Sydney are also popular.In fact, Sydney was favoured ahead of Tokyo by “some distance”, CBRE’s report says.Australia’s cities remain highly popular with Asia Pacific investors because of their liquidity, transparency and positive long-term prospects, the report finds.Office is the favourite asset sector, with logistics up in 2017 and running a “very close second”.CBRE’s survey was carried out between 26 December 2016 and 4 February 2017, and attracted around 2,000 respondents globally. Fund and managers accounted for around a third of survey participants, while insurance companies, pension funds and sovereign wealth funds were responsible for 10 per cent. Most investors indicate that their buying activity will meet or exceed 2016 levels. Those investors planning to spend more (40 per cent) outweigh those planning to spend less (16 per cent), indicating a continuing positive attitude to real estate as an asset class, CBRE finds.”This time last year, investors were reeling from the volatility in world stock markets, now they are seeing equities reach record highs and economic sentiment is positive,” says CBRE’s global president of Capital Markets, Chris Ludeman.”Although there is uncertainty about the direction that economic policy will take, there is also a growing anticipation that changes will unlock growth,” Ludeman adds.In last year’s survey, investors had shifted decisively in favor of core assets and away from secondary and value-added risk classes. That trend has partially reversed in 2017 with a fall in demand for core assets and an increased interest in core-plus and opportunistic assets. Nearly half of investors (48%) cite the high price of real estate as the main obstacle to deploying capital. While there are some clouds on the horizon, “economic momentum, alongside the yield advantages of property as an asset class, should ensure another year of substantial capital flows into global real estate,” Ludeman concludes.Download the CBRE Global Investor Intentions Survey.