According to Cushman & Wakefield’s latest International Investment Atlas released today, the global property investment market saw a modest 6% rise in activity during 2012 with volumes reaching US$929bn (€714bn).
In what was a difficult year in most markets, investment volumes rallied in Q4 signaling the beginning of real momentum and a return of confidence in the market which could see volumes this year increase 14% to exceed US$1 trillion mark (€815bn) for the first time since 2007.
According to Cushman & Wakefield, the increase in activity this year will be led by North America and Asian markets and driven by increased allocations to property by institutions and high net worth individuals/families plus increased stock on coming to the market.
Glenn Rufrano, Global President & CEO of Cushman & Wakefield said: “2012 was a year of profound uncertainty in the global economy which impeded decision making and market activity. We anticipate there will be less uncertainly this year and in fact, a true change in market confidence and indeed momentum seems to have been confirmed in the early months of 2013 as major global risk factors are seen to be receding – albeit not yet disappearing. “
In 2012, China and the USA were two key engines of the strong finish – the former benefitting from a record high in land right sales and the latter seeing a rush of activity to beat year-end capital gains tax hikes. However growth was far from limited to these two global heavyweights and a range of other markets in all regions saw a final quarter rally notably Spain, Poland, Norway, Switzerland, Indonesia, Thailand, India and Australia.
The market to date has remained selective and focused on core product. By region, North America and Developing Asia drove the overall global rise, with mature European and Asian markets largely flat and emerging markets in Europe, the Middle East, Africa and South America all down.
In 2012 by country , the USA and Mexico were the biggest gainers in the Americas, Malaysia, Vietnam, Australia and New Zealand enjoyed the strongest growth rates in Asia, while for Europe, Finland, Norway, Switzerland and Ireland saw the highest growth. More modest increases in big markets like China, Germany and Hong Kong were also clearly instrumental in delivering growth at the global level.
Shawna Yang, Associate Director of Capital Markets, Cushman & Wakefield’s Korea office said “For Korea market, even with the persistent uncertainty of the global economy, 2012 was an active year in terms of the number of investment transactions, where there was a strong preference for fully-tenanted office buildings in core locations. Low interest rates have led to abundant liquidity in the market, which in turn has strengthened investor demand. Looking forward to 2013, investors will continue to focus on secure, core office assets. As such, prime yields will be compressed further whereas non-core market figures will remain high.”
She adds “The buyers that that require extra return or portfolio diversification will look to increase their exposure to other asset classes, such as the retail or industrial. As the local investment market became quite competitive, many Korean institutional investors sought for opportunities outside of Korea, primarily in global gateway cities such as London and NYC.”