Globally, there is set to be a 50 per cent surge in investment into commercial real estate in the second half of the year, predicts Colliers International in its new Global Capital Markets 2021 Investor Outlook paper. In EMEA, the momentum continues in the industrial and logistics and living sectors which are less dependent on economic growth. Investors are also particularly interested in core office stock, albeit selectively, with some 32 per cent of respondents looking to invest in the sector.
For those with higher risk appetite, retail proved a popular pick for 2021 with 47 per cent of EMEA investors indicating they want to invest in the sector in the next two years, driven by the potential for redevelopment of retail sites and assets
The increased confidence in the global property market will come from the recent vaccine developments, geo-political stability and continued government stimulus. The report combines analysis and views from nearly 300 respondents including major institutional investors, listed property companies, sovereign wealth funds, private equity funds, family offices and third-party money managers.
“Based on our global analysis, which gives us a bird’s-eye view of investors interests and expected appetite, longer-term tailwinds in the property sector remain intact. With a massive volume of equity raised globally and the need for real assets, investors are eager to deploy pent-up capital and pursue opportunities during the year” said Tony Horrell, Global Head of Capital Markets at Colliers International. “We expect to see movement up the risk curve this year, with investors exploring all types of assets from senior housing to public infrastructure projects.”
The report indicates that 98% of investors across all regions aim to expand their portfolios, with approximately 60% looking to expand by more than 10 per cent. Furthermore, 67% of survey respondents in EMEA are planning their next investment in the first quarter of 2021.
Key takeaways from the Colliers Global Capital Markets 2021 Investor Outlook report include:
- Logistics and living sectors are thriving. Both sectors were among investors’ top three choices across all regions. Intense demand for these assets will require investors to broaden their geographic focus and build portfolios through joint venture platforms and local partnerships. In EMEA, the survey showed over a third of investors expect value add industrial and logistics assets to appreciate 10% or more in 2021. Investors are increasingly willing to consider going up the risk curve and investigate all European markets in these sectors.
- Alternatives, platforms and partnerships are playing a bigger part. Rising demand for alternative assets such as data centres, senior living and life science assets reflects broader structural shifts amplified by the pandemic.
- Across EMEA, offices remain the most sought-after asset class. Respondents named office properties in major cities such as London as Munich the most attractive prospect. This was particularly evident with overseas capital, with the highest number of overseas investors were planning to invest in London and Frankfurt offices.
Richard Divall, head of cross border capital markets, EMEA, at Colliers International, added: “European offices are attracting solid interest, especially from overseas capital. We are seeing investors being more selective, preferring the large, established liquid markets and the winning cities of Europe. While there will be continued scrutiny of what constitutes a future-proof office asset and further analysis of any decreased occupier demand in 2021, low vacancy and modest supply before the pandemic in most of these winning cities add to the sector’s resilience.”