SHANGHAI--(BUSINESS WIRE)--New capital targeting commercial real estate globally grew to reach a new record of USD443bn in 2015, according to a report out from Cushman & Wakefield.
The 12th edition of the Great Wall of Money report tracks the amount of newly-raised capital targeting real estate at a global level. The report shows that the flow of capital is unrestricted as investors seek opportunities in all markets across the world.
However, despite investment activity approaching record levels in many markets, the pace of growth in capital raising is slowing, according to the report. Indeed, 2015’s 3% increase is much weaker than the 21% growth recorded in 2014 and reflects how active investors have been in putting their capital to work in an increasingly buoyant market.
Growth in available capital was recorded across the three regions with Asia Pacific leading the charge with an 8% increase to US$131bn, bolstered by the closing of a number of funds during the course of 2015. Despite this increase, however, the region attracts the least capital. Both EMEA and the Americas saw capital expand by less than 2%. Across EMEA, there is US$143bn of new capital, with the Americas still attracting the greatest amount at US$169bn.
Carlo Barel di Sant’Albano, Chief Executive of Cushman & Wakefield’s Global Capital Markets & Investor Services business, commented: “As global equity markets face increased uncertainty, factors such as quantitative easing and lower-for-longer interest rates will sustain the relative attractiveness of commercial real estate, helping to bolster the continued flow of capital into real estate and related funds.
“With available capital at record levels, effective deployment becomes a critical concern for investors. This will benefit the large and liquid markets of the US, China, UK, Japan and Germany. We also expect the strong momentum of cross border flows to continue as investors seek to diversify across markets.
“As opinion on the future of the markets becomes increasingly divided, we anticipate there will be a further transformation in the way in which capital is allocated. Investors will focus on de-risking decisions and will favour preferred managers with strong track records. In addition, given the significant capital allocated to real estate, investors will evaluate joint venture and platform deals as a route to deploy capital more easily in the market.”
Figure 1: Available capital by country/market (US$ bn)
The report states that more than half (58%) of investors are concentrated on a single geography, whereas multi-country funds represent 42% of capital. Across the regions, variations in strategies are reported and there are more single-country/market funds active in the Americas (48%) and Asia Pacific (30%) compared to EMEA (22%).
Report author Nigel Almond, Cushman & Wakefield’s Director of Capital Markets Research, said: “The weight of cross border flows continues to transform real estate markets across the globe. Most notably, more than 40% of capital targeting both Asia Pacific and EMEA is from outside their respective regions, with North American-sourced capital dominating.
“Although Asian and EMEA funds are deploying a higher proportion of raised capital in their own regions, we see a significant share flowing across regional borders. Global and Asian opportunities remain key targets for European capital, while Asian money is set to diversify across markets globally, following the trend of many Asian institutions in recent years.”
The successful merger of Cushman & Wakefield and DTZ closed September 1, 2015. The firm now operates under the iconic Cushman & Wakefield brand and has a new visual identity and logo that position the firm for the future and reflect its trusted global legacy and wider history. The new Cushman & Wakefield is led by Chairman & Chief Executive Officer Brett White and Global President Tod Lickerman. The company is majority owned by an investor group led by TPG, PAG, and OTPP.
About DTZ/Cushman & Wakefield
Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop and live. The firm’s 43,000 employees in more than 60 countries provide deep local and global insights that create significant value for occupiers and investors around the world. In Greater China, the firm has a co-branded presence under the name of DTZ/Cushman & Wakefield and operates 20 offices in the region. Cushman & Wakefield is among the largest commercial real estate services firms with revenues of US$5 billion across core services of agency leasing, asset services, capital markets, facility services, global occupier services, investment & asset management, project management, tenant representation and valuation & advisory. To learn more, please visit www.dtzcushwake.com or follow us on WeChat (DTZ_China) and LinkedIn (https://www.linkedin.com/company/dtz-cushman-wakefield).