Property investment hits new highs globally

Anyone doubting the strength of the property market in Australia – and globally – should look to the growing pile of data which provides evidence of that strength.

Most recently came news that global real estate investment turned a corner in 2013, with a 22.6% increase in transactions from 2012, and is predicted to hit further highs this year.

According to the latest International Investment Atlas, from Cushman & Wakefield, the global property investment market delivered US$1.18 trillion of transactions last year. This was the highest total since 2007.

Cushman & Wakefield’s David Hutchings said this high came on the back of greater confidence as recessions ended, business sentiment rallied and increased liquidity affected most global markets.

In 2014, the company was forecasting a 13% increase in global investment to US$1.33 trillion, with the US and Western Europe predicted to drive the uplift in activity, he said.

“Momentum is building further this year with signs of a firmer occupier market as well as greater investment demand and new sources of debt set to drive investment activity and property pricing higher.”

In 2013, it was the Asia-Pacific region that led the way for investment volume with a 25% increase over the year. This was thanks to growth in the markets of China, Japan and Australia.

The improving global economy and rising domestic demand means that Asia-Pacific markets are forecast to see a further steady rise in activity of 7-8%.

David Woolford, from Cushman & Wakefield Australia, said that, record low interest rates and improved access to equity was resulting in substantial increases in acquisition activity from Australian investors.
“At the same time, the strength of the Australian economy in a global sense, as well as the higher yields on offer compared to other advanced economies, has seen demand rise significantly from offshore investors.”

As more stock was expected to come on the local market in the next 12 months, the company expected that investment volumes will continue to rise over the course of 2014.

According to the atlas data, foreign investors grew in significance globally with a 24.3% rise in their activity over the year. The main source of international capital was the Asia-Pacific region, which accounted for nearly 40% of all non-domestic spending.

Hutchings said that property markets were becoming increasingly idiosyncratic and driven by their own individual advantages. This was leading to a more divergent global market with real winners and losers.

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