Global property market to recover in coming year

The global property investment market recovery is set to continue in 2011 but occupier markets will drive performance, according to a new report unveiled at MIPIM in Cannes.

A rising level of investment activity will include a broader focus on emerging and second tier markets not just the core Gateway cities which were the winners in 2010, according to Cushman & Wakefield's International Investment Atlas 2011. The report forecasts that an increasing focus on the occupier will characterise the market this year, with rent and income growth to take over from yield compression in driving performance.

The report, which monitors investment flows in commercial property in 56 countries, reveals that global investment volumes jumped 42% to US$564 billion in 2010. Dealing volumes are still only around 50% of their peak but they are over 80% of their five year average and in some markets are setting fresh highs, notably emerging markets in Asia and Latin America.

Yields fell in most areas last year, as higher demand and limited supply impacted. The global average fell 21bp to 7.6% and a further fall averaging 30bp is forecast for 2011. Asia held the top spot as the leading region for investment, accounting for more than half of all global activity for the second year running, followed by the US in second place and the UK in third.

Volumes in the top 20 cities grew by 59% as investors focused on the most robust locations. London was the leading global city for investment, followed by Tokyo, New York and Paris.

‘2011 will present more challenges for the global real estate market. However, there are upside risks to consider, in the potential for economic recovery to be sustained and for increasing levels of business and financial confidence to translate into greater than expected levels of market activity,’ said Greg Vorwaller, global head of capital markets at Cushman & Wakefield.

Source: NuWire Investor