CBRE Releases Latest Research Report Global Capital Markets: Will New Sources of Capital Extend the Cycle?
October 27, 2015, Shanghai –The latest data from CBRE’s report Global Capital Markets: Will New Sources of Capital Extend the Cycle? suggested that Asian investors accounted for nearly 20% of global cross-border investment in H1 2015, or US$19 billion. China is the top source of Asian outbound capital in terms of dollar value with US$6.6 billion, followed by Singapore (US$4.4 billion) and Hong Kong (US$2.2 billion). On global basis, China is the 4th largest source of cross-border capital in commercial real estate as of H1 2015, immediately after US (US$25.4 billion), Canada (US$8.46 billion) and Germany (US$7.12 billion).
Figure: Top Sources of Cross-border Capital in Global CRE by Buyer Origin
The
last two years have seen a number of shifts in sector distribution of the
global commercial real estate (CRE) investment market. The dominance of the office sector has
been gradually eroding, from 46% of the market in 2007 to just 35% in H1
2015. In China
and many Asian countries, as real estate markets are continuing to develop, further
sector-rebalancing is expected in the mid-term, with the industrial and
hospitality segments poised to gain from the shift, as well as
alternatives sectors such as senior housing and healthcare.
Another most important shift in real estate since the global financial
crisis has been the rise of ’permanent’
capital.
Investors such as REITs and
sovereign wealth funds don’t have to trade assets as they are
not subject to short-term return metrics that tend to make traders out of investors in
many other asset classes. In 2014, REITs and SWFs accounted for 32%
of international capital flows into US gateway cities, up from 0% in 2009. Frank Chen, Executive Director, Head of CBRE Research, China, commented: “in recent
years, the growing presence of ’permanent’ capital has
significantly impacted China’s commercial real estate investment
market. In the major domestic transactions conducted
in H1 2015, ’permanent’ capital accounted
for nearly 25%. “
On top destinations of global capital,
USA, UK and Germany remain, by far, the three largest CRE investment markets
globally. A combined total of US$301 billion transacted in these three
countries in H1 2015, an unusually high (74%) share of the global market. China ranks the 13th with US$4 billion
on Top 20 Markets Ranking, reflecting 3 spots down from 2014.
Johnny Shao, Executive Director, Head of Investment Properties, CBRE China commented: “Global commercial real estate investment reached US$407 billion in H1 2015, the strongest first half since H1 2007 ($442 billion). We forecast continued growth for global investment activity overall in the second half of 2015. Although China is experiencing weaker inbound investment activity due to a combination of expensive, in a global context, pricing and the recent economic slowdown, we believe China has the momentum to grow on its long-term road to global expansion. We further foresee that China will benefit from increased investments by long-term asset holders and the development of a more balanced sector mix.”
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2014 revenue). The Company has more than 70,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 400 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
