Cross-border real estate investment set to grow

A survey of the top 120 global investors in real estate shows that foreign investment in the asset class is set to grow. Fifty eight percent of respondents to DTZ’s fifth annual global investment intentions survey invest in foreign real estate. Of the 42% that do not, more than half said they intended to. Almost a quarter of those not investing in foreign real estate, are planning to do so this year.

The top five markets that investors say they are looking at are the UK, Germany, the US, Singapore and Malaysia.

The report says that the driver of a global real estate strategy by investors is the growing recognition of the role of foreign real estate in portfolio diversification, and the need to search for higher yields and value farther afield.

Both European and US investors named UK capital city offices among their top priorities for the near future. However, both sets of investors said their regional markets were the highest priorities. The UK and Germany filled the top 10 rankings for European investors in the commercial property sector. For US investors, Canada and the US were given as the major regions of investment opportunity, also in commercial property.

In Asia, Singapore and Malaysia were the two countries mentioned for domestic investment. Residential investment in both countries ranked top. The author of the report notes that surprisingly China does not figure as a priority for Asian Pacific investors, yet US-standard shops made the top eight target list. Both US and European investors named China as a low priority future investment. In determining location of investments, political stability was given as the number one concern for all regions, says the report.

Direct acquisition is the preferred route given by all investors, whether investing domestically or abroad. However, indirect investments are expected to increase as a by-product of overall increased foreign investment. Europeans expect the largest increase in holdings in indirect real estate, with figures of as much as 43% projected over the next five years.