According to DTZ latest study, US$329bn of capital is available for investment in the direct real estate markets in 2011. This is a 17% increase on the US$281bn reported mid-2010. Much of the growth reflects an increase in funds targeting Asia Pacific, up 45% to US$104bn (Figure 1).
- The growth in newly available capital has been driven by third party fund managers and publicly listed companies. Also, the majority of funds continue to target multiple property types.
- The target geography is now evenly split between single country and multi country funds. Asian and European investors have a preference towards investing in their home region.
Based on these findings we come to the following outlook:
- With more capital targeting Asia Pacific markets, we highlight the risk that some of these markets may re-price more quickly than suggested by our fundamental analysis.
- If the attractiveness of global property continues its decline of the last four quarters, we project a stabilisation in the amount of new capital available in the next few years.
- A raft of new regulatory initiatives could limit the availability of both new equity and debt capital in the longer term. Investors are already expecting these regulations
Significant increase in capital targeting Asia Pacific
Based on our updated analysis we estimate there to be US$329bn of capital available for investment in the direct real estate markets in 2011. This represents a 17% increase on the US$281bn we estimated to be available in mid-2010 and 44% greater than the US$229bn at year-end 2009 .
Much of the growth in available capital reflects a growing number of funds targeting the Asia Pacific region. In total we estimate this to represent US$104bn, a 45% increase on the $71bn available at mid-2010.We have also seen a further increase in the amount of capital targeting the Americas, which rose 14% to US$111bn. In contrast the amount of available capital targeting the EMEA region rose just 2% to US$114bn. Since the end of 2009, the amount of available capital targeting EMEA has remained virtually unchanged.
New capital targets most attractive regions
The impact of increased capital targeting Asia Pacific and the Americas now means the volume of capital targeting the three core regions globally is now virtually equally distributed. EMEA (Europe, the Middle East and Africa) still attracts the largest share of capital (35%), only marginally ahead of the Americas (34%) and Asia Pacific (32%). This compares with our first report, when close to half the capital targeted EMEA.The increase in capital targeting Asia Pacific and the Americas is consistent with the latest DTZ Fair Value Index™. This reflects the focus of investment on more attractive markets. Europe’s index score has remained below 50 in the past two quarters, indicating that a higher proportion of markets are COLD. In contrast the index scores for Asia Pacific and the US have been above 50 indicating a higher proportion of HOT markets.With more capital now targeting Asia Pacific markets we would expect some of these markets to re-price more quickly than suggested by our fundamental analysis. We have already seen this in the UK and it is also starting to happen in continental Europe. Read More:
Bangkok falls 19 places to 49th most expensive location worldwide
Locations reliant on international tourism have seen their rental markets hit especially hard during the pandemic, resulting in some major drops in the rankings. Bangkok has fallen 19 places to 49th, while Hanoi saw a similar drop of 12 places to 81st.
Is There a Silver lining amid COVID-19?
Thinking of the future impact of this pandemic on office buildings, it may have already dawned on many of us that a majority of potential long-term trends and health measures will become permanent work-life features in the times to come.
Thailand Raises Public Debt Ceiling from 60% to 70% of GDP
Thailand’s State Monetary and Fiscal Policy Committee has decided to raise the ceiling of the public debt-to-GDP ratio from 60%...
Thailand Approves Package to Attract Wealthy Foreigners and Professionals
Thailand’s Cabinet has approved an economic stimulus and investment promotion package aimed at attracting wealthy foreigners and highly skilled professionals...
The Role of Telemedicine Today: During and Beyond the COVID-19
Lockdowns, quarantine periods, and hospitals fast filling to the brink needed the medical community to come up with solutions fast....
Malaysia, Thailand banks to join the ASEAN Banking Integration Framework
Banking institutions from Thailand and Malaysia are invited to join the ASEAN Banking Integration Framework and indicate their interest to...
Climate Change Could Force 49 Million People to Migrate in East Asia and the Pacific
Out-migration hotspots in agricultural areas of central Thailand and Myanmar coincide with areas expected to see declines in both water...