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Global real estate fundraising rises 5% to $429b

By Cherry Cao | April 28, 2015, Tuesday | Online Edition

FUNDRAISING for global real estate investment rose 5 percent to a record US$429 billion in 2015 as investors are turning to real estate for its relatively high income yield and prospect for capital growth, global property services provider DTZ said in a report released today.

Across Asia Pacific, the pool of new money also reached a record US$122 billion, an increase of 4 percent from six months ago, according to the DTZ Great Wall of Money report.

"Across the region China will continue to attract the highest level of capital at US$46 billion, and is the third most targeted market globally, just behind the US and UK," said Andrew Ness, head of China research at DTZ. "Japan is the fourth most attractive market globally attracting US$26 billion of capital with Australia attracting a further US$15 billion as investors are lured by higher return and lower volatility compared to other markets in the region."

There will be US$7 billion targeting Singapore and US$4 billion in Hong Kong, according to DTZ estimates.

While capital targeting real estate continues to increase, investors are facing greater challenges to find a home for their capital, the report said.

As a matter of fact, the investment market in Asia Pacific took a pause for breath in the first quarter of this year following a strong 2014 with investment volume falling 30 percent from same period a year ago to US$17 billion. Volume declined across all the major markets in the region.

Moreover, the strong finish to 2014 also means that stock available for sales has become more limited in the beginning of this year.

"Despite a slow start to 2015, our research has found that investor appetite in the region remains strong," said Dominic Brown, head of Asia Pacific research at DTZ. "Investors may need to accept more aggressive pricing in some markets, or move up the risk curve to source deals with value-add components for higher returns. As a result, we expect downward pressure on property yields to persist in most markets during 2015."

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