The path of the two-speed global economic recovery, currently under way, will determine the prospects for commercial property markets worldwide, property consultant DTZ said in its 2011 Global Outlook report.
The report states that strong economic growth projections in most Asian and Central and Eastern European countries will trigger strong occupier demand. The growth will also underpin strong rental and capital gains for real estate.
In contrast, a protracted recovery in the euro zone, where gross domestic product is likely to expand at a slower pace, will produce more subdued increases in rents and capital values, according to the report.
DTZ forecasts modest capital growth across most regions between 2011 and 2015, with current economic, financial market and regulatory uncertainties continuing to influence the pattern of recovery.
DTZ predicts that during the next five years, rental growth will be the primary driver of capital value growth, since further yield compression from the current low level is unlikely. Consequently, total return is forecast to be led by existing income yield.
The report also predicts that occupier interest in 2011 will remain focused on the prime end of the market. In many locations and across sectors, prime rents have yet to reach pre-crisis levels.
DTZ says the impact of myriad new regulatory reforms and the pending unwinding of monetary policy support programmes are expected to indirectly slow down the property market recovery.
Despite these factors, last year saw significant increases in global transaction volumes. DTZ estimates that a record US$376 billion ($479.5 billion) of equity will be available to target real estate markets between this year and 2013. DTZ anticipates that more proactive equity investors will continue to find innovative solutions to match the available equity and close the US$245 billion global debt-funding gap.
Source : Today – 11 Feb 2011