$362b for global commercial property

About US$280 billion ($362 billion) of capital will be available to invest in global commercial real estate next year, with the United States market drawing the most buying interest as it bottoms out, according to property consultant DTZ

DTZ said the estimated available capital for 2011 would be 22 per cent up on a forecast it made in December, with US$97.4 billion (up 54 per cent) for the US; US$111.8 billion (flat) for Europe, the Middle East and Africa; and US$71.4 billion (up 29 per cent) for the Asia-Pacific region.

“The current attractiveness of the US is in stark contrast to the situation a year ago. Most US markets were cold, offering expected returns below risk-adjusted required returns,” said Mr Nigel Almond, DTZ’s associate director of forecasting and strategy.

“This opportunity remains largely unexploited to date, since transaction volumes in the US have not yet seen the levels witnessed in Europe and Asia Pacific,” he said.

The shift in interest follows an earlier report by DTZ, which found prime commercial property in the US and Asia-Pacific was more attractively priced on a five-year horizon than in Europe.

Listed property companies, many having raised capital to repair their balance sheets during the global financial crisis, are back on the market, equating to 17 per cent of investors, up from 4 per cent in the end-2009 estimate, DTZ said.

The amount of capital targeting assets in a single country is also significantly higher, again due to heightened interest in the US, where some analysts predict the hard-hit office market has hit a bottom.

The proportion of capital eyeing single countries next year rose to 44 per cent, from 30 per cent at end-2009, with about half of those funds looking at the US alone, DTZ said.

Source : Today – 15 Oct 2010

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