Pictured above: Nick Allan, Investment Director for the
Midlands and South West region
DTZ Research, part of global real estate services firm DTZ,
estimates that US$281bn of capital will be available to invest in
global real estate in 2011, a 22% increase on DTZ's previous
estimate in December 2009.
The latest 'The Great Wall of Money' report analyses the capital
being raised by an extensive range of investor groups. The greatest
increase in available capital is forecast to be focused on the US
(US$97bn) representing a significant 54% increase on our December
2009 estimate. This is in line with the DTZ Fair Value Index™
score of 89 which shows most markets in the US now offer an
attractive opportunity to investors. A further US$71bn is targeting
the Asia Pacific region, an increase of 29%. Whilst the
majority of available capital continues to target Europe
(US$112bn), this is unchanged from our December 2009 estimate.
Nick Allan, Investment Director for the Midlands and South West,
commented: "Since our last Great Wall of Money report in December
2009, we have experienced increased investor appetite for prime
city centre stock. Heightened levels of demand, primarily from UK
institutions, prevailed until this summer.
"Since then, there has been a notable decline in enquiries from
UK institutional investors. However some of this has been redressed
by the re-emergence of interest from overseas investors in the
regional markets, including the German open and close ended funds,
who have started to move their attention beyond London as this
market has become overheated for a number of them. Moreover, we
have started to see a number of Sovereign State and Far Eastern
investors enter the regional markets, especially for trophy assets.
Likewise a few UK property companies are also seeing regional
markets as offering value and demand for investment stock has
started to grow again from this sector."
The DTZ report highlights the return of quoted and private
property companies to the market with publicly listed companies now
comprising 17% of available capital, compared to 4% reported in
December 2009. Capital from private property companies and
individuals now accounts for 14% of available capital, rising from
3% previously. Third party managed funds, whilst still accounting
for the majority of available capital, have decreased their share
from 77% to 49%.
DTZ Research data proves that diversification by both geography
and property type continues to be a priority for investors. In line
with the previous analysis, the majority of capital is due to be
invested in multiple countries. However, this share of capital has
decreased from 70% to 56%, highlighting a growing focus on single
country investments. Of those investing in single countries, there
has been a significant increase in funds targeting the US.
The US now accounts for 51% of available single country
focused capital.
The research also reveals that both Asia Pacific and Europe will
continue to be targeted with a higher share of capital, compared to
the amount that has been raised in these regions. This suggests an
increase in cross-border investment in 2011. The recovery of
cross-border investment flows would be from a low base given the
significant retrenchment in recent years .
During the first half of 2010 global investment volumes
increased substantially to US$133bn, double its level in the same
period of 2009. Growth in Asia Pacific tripled, rising to US$64bn
compared to the same period last year. European investment activity
totalled US$54bn representing a 86% increase. The US however, has
yet to see an increase in transactions with volumes remaining flat
at US$15bn in the same period.
Hans Vrensen, Global Head of DTZ Research, said: "With the
current levels of capital targeting real estate markets, we
anticipate an increase in global transaction volumes during 2011.
There have been significant changes in the targeting of this
available capital over the past 9 months. As a result, we expect US
volumes to pick up more substantially than in Asia Pacific and
Europe."