Global investment levels reach new high of US$1.62 trillion in 2017
Asian money represents more than half of all invested capital
Outlook for 2018 is positive for Ireland
London shrugs off Brexit fears to remain most sought-after city for international capital
Potential for a further increase in global volumes in 2018
CANNES, March 14, 2018: The latest Cushman & Wakefield “Global Investment Atlas 2018”, launched today at MIPIM, reviews international investment patterns from 2017 and anticipates market performance for the year ahead. The report shows the highest level of real estate investment on record, with a total of US$1.62 trillion invested in the year. This compared to US$1.43 trillion in 2016, with further improvement anticipated in 2018.
Asian investors were the major driving force behind these record levels of real estate investment, with money from the region accounting for more than half of all capital deployed and 46% of all cross-border activity. What is more, with the range of sources of capital within the region still increasing, this is likely to signal a period of sustained dominance.
Global Investment Volumes by Region
Source: Cushman & Wakefield, RCA: Deals over US$5mn including land
Despite the outperformance of the US economy, investment activity in North America declined last year, with a fall of -6.9% overall. Both global and domestic buyers drew back, but there were bright spots to be found. For example, Canadian investment grew at its strongest rate in five years at +12.0% and record levels of dry powder are still being aimed at the US. As a result, the outlook for 2018 remains strong, with deal activity set to rise even though a shortage of big-ticket sales may keep volumes flat.
Europe was widely acknowledged to have experienced its healthiest economic performance in a decade. The European investment market grew by +8.3% last year, the third strongest year on record. Whilst all areas experienced improving volumes, Southern Europe led the pack with transactions up by +19.2% as economic improvements and reforms brightened the outlook.
In terms of sector trends, the industrial segment underwent the strongest growth in volumes at +43.3% y/y, driven by the movement of retail sales to online platforms. Nonetheless, offices retained the largest share of the market at over 40%, with prime yields falling by -36bps as a result of sustained demand.
Cross border investment grew +7.5%, to represent 51.0% of the market. Although Asian capital into EMEA grew by +95.0% on the year, North American investors were the strongest global players in the region overall. Despite predictions to the contrary, the UK was the most targeted market, with overall volumes closing the year +3.9% above those in Germany.
However, London was the only UK market to enter the list of top 10 cities targeted in the region whilst German markets, led by Berlin, accounted for half of this line-up. Yields again redefined historic lows in Europe as a result, with all-sector prime yields falling by -29bps on the year.
Carlo Barel di Sant’Albano, Chief Executive of Cushman & Wakefield’s Global Capital Markets & Investor Services business, said: “Global real estate performed exceptionally well in 2017 with volumes up sharply and increasing valuations. This has provided good momentum going into 2018 and the balance of pricing, supply and demand all point to a further healthy year. Indeed, while stock is hard to find, we are forecasting a small gain in global volumes thanks to more development, an increase in profit taking and more corporate activity.”
Commenting on the report, Jonathan Hillyer, Director of Investments, Cushman & Wakefield, Ireland, said: “Following a record year for global growth, the outlook for 2018 is positive for Ireland, largely underpinned by real momentum in the Irish economy. Economic data due to be released this week, will see Ireland maintain its position as one of the fastest growing economies in Europe. This coupled with strengthening occupational demand and increased development will further encourage cross-border investment in the year ahead.”
About Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.