The movement of money from Asia to Western markets in Europe and the United States will likely still be a major influence on global real estate this year, according to the Global Emerging Trends in Real Estate 2015 report jointly published by PwC and the Urban Land Institute (ULI).
The report, based on the views of senior global property investors, found that 84 percent of Asia-Pacific respondents expect cross-border capital into Europe to increase significantly.
Local money coming out of China and South Korea will continue moving into international markets, and will be supplemented in the coming years by pension fund capital from Japan.
The so-called ‘flight to safety’ effect was cited as another reason leading many investors to move capital to perceived safe havens.
Meanwhile, money flows into major assets in the UK and US is likely to shift towards less high-profile cities in Germany, France and the US, noted the report.
Simon Hardwick, PwC Legal partner and one of the report’s authors, said: “There is still a wall of capital targeting real estate opportunities in many markets across the globe. The search for better yields has taken some investors into development and secondary markets, moving them up the risk curve. But investors must strike a balance between the need to deploy capital and the ability to achieve good returns, at a time when there is such a difference in the economic conditions across the globe.
“Real estate investors have a wide range of issues to consider when making investment decisions. What is clear is that they may have to approach those decisions in a completely different way in the future. Capital allocations may need to be made to a wider range of asset types than ever before, ranging from retirement and student housing to data centres and self-storage.”
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, wrote this story. To contact him about this or other stories email firstname.lastname@example.org