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Funds for realty set to rise to 9.6%
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INSTITUTIONAL investors are set to increase real estate investment this year to 9.6 percent from 9.4 percent in 2014, which could mean an extra US$52.5 billion in the market given the size of the capital pool, Colliers International said in its latest report.
The rise in allocated funds for real estate investment follows a US$105 billion increase last year, up an average of 8.9 percent of existing portfolios in 2013.
Walter Boettcher, EMEA (Europe, the Middle East and Africa) research director and economist at Colliers, highlighted the “extent to which property investment has become globalized with funds needing to reach beyond their domestic borders to satisfy their target allocations to property.”
Property offers relatively high returns compared to bonds and equities amid extraordinarily low interest rates and a global search for yields, according to Boettcher.
But he also pointed out concerns have arisen for this particular property cycle that there is too much money chasing the same product.
More Asian investors predominantly from China will go outbound this year as restrictions on overseas investment are relaxed and demand for overseas real estate will continue to grow as investors seek better returns and diversification, Colliers said.
Colliers, a global real estate services provider, also pointed out Chinese investors were major investors in Asia in 2014. Cross-border investments totaled US$262 billion last year. Asia capital accounted for 30 percent of the cross-border investment last year, up from 13 percent in 2007, the Colliers research showed.
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