Investors Stay on Top By Adopting Diverse Strategies | Evidenced by Six Years of Strong Global Investment Volumes

10 07 19 EXPO general header

According to Colliers International’s latest Global Capital Flows Research – Life on the High Plateau.


Investors have adopted an increasingly diverse set of strategies to commercial property investment, ensuring global investment volumes have remained above the previous peak of end-2007 for the sixth year in a row reaching over US$1.7 trillion on an annual rolling basis, a situation likely to continue into 2020.  That’s according to Colliers International, which today has released its latest Capital Flows Research at international property and investment trade fair, EXPO REAL (7- 9 October 2019).

Key themes in 2019


  • The 12-month rolling average for global investment volumes stood at over US$1.7 trillion at mid-2019 and remains significantly ahead of the US$ 1.25 trillion peak of end of 2007.
  • Although global political fragmentation is starting to have a global economic impact, investors are responding by undertaking selective strategies to succeed by taking a localised network approach to diversification, allowing them to take informed decisions along the risk curve.
  • Much of the globally active capital has shifted momentum into the living and hospitality sectors driven by demographic change, the sharp rise in global tourism and experiential demand. 
  • The lack of available product, particularly in Europe, is resulting in diverse strategies incorporating core, value-add and opportunistic plays with investors seeking to drive value and returns through repositioning and driving value from increased income streams. 
  • Investment into debt and development is also on the rise with growth in forward purchase and funding agreements supported by strong latent demand for modern space, especially in areas of constrained availability. Vacancy rates for office and industrial assets are at historic lows across Europe, maintaining and driving rental growth over the next 12 months. 
  • Although retail is currently in the eye of a structural storm, investment into the sector has expanded since 2017 but away from traditional shopping centres. Retail remains a key component of placemaking in towns and cities, and where it is right-sized and relevant to communities and consumers, can continue to contribute positively to an investment portfolio.
  • The shift towards to sustainability and smart cities is increasingly evident in Europe with a growing list of major investors signed up to tackling climate change and reduce their carbon footprint, impacting the assets they will acquire and hold. This runs concurrently with a drive for real assets, notably clean infrastructure and alternative energy, to help drive a better carbon footprint.  
  • Looking at Europe – it continues to offer both, or a mix of, higher yields and positive currency gains to other global domiciles. Germany is the number one market for investment flows, equally German investors are the biggest net investors across Europe.

We hit a peak in 2015 and sentiment was that volumes would fall away after that, especially after the referendum vote in the UK in 2016. Yet levels have been maintained ever since. Investors are still buying and demand for commercial property continues, they are just changing what and where they buy,” said Richard Divall, Colliers’ Head of Cross Border Capital Markets I EMEA.  “We are increasingly seeing investors moving out of their home markets and diversifying asset class, driven by the search for yield and returns.”

Global Overview


“Restraint among investors, who are contending with a slowdown in global economic growth, political upheaval, and a changing retail landscape are factors contributing to a levelling off of volumes,” said Damian Harrington, Head of Research EMEA. “However, weight of capital and ‘cheap money’ is still immense and that’s not going to change any time soon, especially with lower economic growth rates supressing interest rates.  Instead, investors are shifting their strategy from core to value add and opportunistic; others are adapting their buying strategy to more living and hospitality type assets, while others are prepared to engage further in funding or acquiring new developments. We are also seeing more big-ticket platform deals, as the biggest global investors seek to deploy large volumes of capital.” 

While global investment momentum continues, activity was far from homogeneous and investors were reacting to the market. Investment fell in the EMEA region but grew in the Americas and Asia-Pacific regions. The latter region broke yet another record as annual rolling volumes hit a new first-half high of US$ 870 billion, according to the latest cross-border flows data from Colliers, albeit driven by investment into development activity in China. 


Cross-border Capital


Colliers’ research shows there are significant differences between cross-border and domestic capital across the three main global regions, with Europe offering the most internationalised markets. In Europe, the share of domestic and cross-border activity is balanced at 50 per cent each, which has been the case for the last few years. In the Asia-Pacific region this is true in the likes of Hong Kong, Singapore and Shanghai but Seoul and Tokyo remain highly domestic. North American markets are also highly domestic, where national investors account for over 80 per cent of activity. So, we have some significant differences in terms of the capital base at work in major global cities, although the major fund managers domiciled in each location will be representing similar global capital sources in their funds, separate accounts and specific mandates.

 

 

Related Experts

Damian Harrington

Director | Head of EMEA Research

EMEA Headquarters

I am Director and Head of EMEA Research for Colliers International, having previously been Director and Head of Eastern European Research with Colliers for 7 years. 

I have worked within the real estate profession across EMEA for 20 years, living and working from bases in London, Dubai, Prague and more recently Helsinki.

I spent the first 10 years of my working life in London, starting as a development/investment consultant for an independent research house.

This was prior to joining CB Richard Ellis where I led emerging market research in MENA and CEE for 3 years. I resigned from CB Richard Ellis to develop and manage my own independent consultancy based in the UK, before joining Colliers in 2009. As of 1st July 2015, I was promoted to Head of EMEA Research. 

I use my experience and analytical skills to take a forward looking view of market opportunities & challenges impacting the industry on behalf of internal and external clients. 

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Richard Divall

Head of Cross Border Capital Markets I EMEA

EMEA Headquarters

As Head of Cross Border Capital Markets, EMEA, I work with international clients who are interested in investing in the region and connect them with the best local Colliers expert based on their investment requirements. Conversely, I also help investors based in EMEA expand their portfolios to other regions around the world. Through my extensive connectivity in the global real estate market, I can connect capital with local expertise, regardless of location.

I work with a broad spectrum of clients including Sovereign Wealth Funds, global institutions, global private equity investors and high net worth individuals. Clients choose to work with me based on the full range of advisory services I provide including a macro view on local economies and property sectors, investor sentiment around the world and access to local buyers and sellers.

Working with local offices in EMEA, we are able to provide a full range of advisory services including:

  • Local market reports
  • Financial analysis
  • Professional services
    • Asset management
    • Building surveys
    • Valuation
  • Initial tax advice
  • Banking finance

I have over 17 years real estate investment experience and during my career I have been involved in over £2billion in transactions in the UK.

 

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Charlotte Williams

Director of PR & Communications| UK & EMEA

London - West End

As Director of PR & Communications in the UK and EMEA I am responsible for:
• Developing and executing internal and external communications strategy for the UK and EMEA business.
• Developing and implementing tactical communications plans to build the brand and promote key messages across all media - print, broadcast and social
• Advising senior management on communications reputation management and developing a media engagement programme that supports key business lines.
• Media evaluation and reporting objectives, targets and successes across the business.
• Delivering strategic communications programmes for all our M&A activity

Managment:

  • Manage the UK in-house PR teams
  • Provide strategic direction to the PR teams acorss EMEA
  • For a year (2013/2014) I was Acting Head of EMEA Marketing & Communications (maternity leave cover)
  • I am a member of the EMEA Marketing Leadership and Global PR & Social teams
  • I lead the EMEA PR Leadership team
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