Colliers International conducted their annual in-depth survey with over 500 investors worldwide and the responses point to an optimistic year for global investing in 2014. The survey report indicates that: “Globally, investors are in an expansion mood, with 70% planning to expand property portfolios in the next six months.”
Steady improvement in increased sales volume will continue, particularly in the US and UK where there is some shortage of supply coupled with greater investor confidence and demand, but also throughout Europe.
While optimism is the word for 2014, there is still some global economic and political uncertainty. There is potential for rising interest rates and not much easing in current underwriting criteria so investors will remain somewhat cautious. Some investors will remain focused on investing in their domestic countries and regions. However, property fundamentals and yield, economic growth of a region, asset appreciation, and ease of liquidity are rated higher as an influential investing indicator than political risk in the global survey.
Demand for investing in “safe havens” will also increase in 2014. The survey indicates that 80% of the investors have difficulty finding good investment opportunities because of increasing competition in the stable economic markets. Many investors will get creative in finding investment opportunities to maintain strong returns.
The survey indicates that the appeal of global gateway cities — London, New York, Tokyo, Sydney — are popular locations for local and overseas capital. However, as a result, these markets are showing lower yields and distorted risk/return ratios.
Targeted European cities by global investors include London, Madrid, Frankfurt, Munich, Amsterdam, Brussels, Paris, Warsaw, Moscow and Prague.
Targeted US cities by global investors include the New York city area, Chicago, California major cities (Los Angeles, San Francisco, Sacramento, Orange County, San Diego), Florida major cities (Miami, Jacksonville, Tampa), Las Vegas Indianapolis, Atlanta, and Philadelphia. The US was indicated as one of the most desirable investment locations and 44% of the global investors are considering the US as their primary focus in the next 12 months.
Colliers International 2014 Outlook: http://www.colliers.com/en-us/insights/market-news/2014-property-investor-report#.UujGwBA1jIU
Jones Lang LaSalle also indicates that investors are optimistic about global real estate markets for 2014. The reasons are continuing world economy recoveries, improved business confidence and balance sheets, and an improved lending environment.
For Europe, 2013 sales transaction volumes increased by 5-10% higher than the previous year. Market strength continues in the three largest markets, UK, Germany and France, and also there are signs of transactions growth in smaller markets in Southern and Central Europe.
In the US, sales volumes for 2013 increased by 10-15% from the previous year and a similar growth rate is projected for 2014. The outlook for US investing is favorable because of the increase in economic drivers, low interest rates, debt financing, and increase in investor risk appetite. Both domestic and overseas demand will be strong for US investors.
Jones Lang LaSalle 2014 Outlook: http://www.joneslanglasalle.com/GMP/en-gb/Pages/globalmarketperspective.aspx
Property location, up-side potential, and yield are the key drivers for investment decisions and will continue to be in 2014.
If you would like more detailed information about these reports, please contact me at christine@clarusrealestate.com or www.Clarusrealestate.com. Happy New Year and Happy Investing!
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