Global Investor Sentiment Survey

10 11 2010

The United States’ investment sales market has the potential for increased fluidity in the year ahead, based on findings from Colliers International’s Q3 2010 Global Investor Sentiment Survey.

More than six out of 10 U.S. real estate investors responding to the survey indicated that they are considering selling property over the next year, up considerably from the 23 percent reported in the Q1 response. Meanwhile, 85 percent of U.S. investors expressed a desire to buy assets domestically during that time, with a focus on primary markets nationwide. The combined forces may position a significantly increased number of U.S. assets to trade over the next 12 months.

In particular, U.S. investors noted markets in California, Texas, New York/New Jersey and Florida, as well as Washington, D.C., Boston, Atlanta, Chicago, Denver and Seattle as key targets.

Further, 60 percent of U.S. real estate investor respondents expect to expand their portfolios in the coming year. An additional three out of 10 expect to maintain the size of their portfolios, with some of those expressing an interest in rebalancing their portfolios among different asset classes.

The survey, which includes investors from around the globe, also determined that the majority of U.S. respondents still believe that the “Property Clock” is at six o’clock, or at the bottom of the cycle. That is in sharp contrast to the average globally, which puts the time at eight o’clock, or at the beginning of an up cycle, but is similar to the U.S. sentiment in the first quarter of 2010.

The Property Clock equates market cycles to specific times of the day, with 12 o’clock representing the top of the market and six o’clock representing the bottom. Each six-hour period in between designates rising (after six o’clock to 12 o’clock) or declining (after 12 o’clock to six o’clock) cycles.

“With the Property Clock at six, it is no wonder why so many investors are seeking to expand their portfolios in the coming year,” said Dylan Taylor, Chief Executive Officer of Colliers International in the U.S. “Investors recognize that prices are at the bottom and see tremendous value in commercial real estate. This kind of positive sentiment expressed by U.S. investors is often a precursor to a more active investment sales market. There is plenty of pent-up demand and the survey suggests investors are ready to get off the sidelines and back into the game.”

The survey also reflected overall positive momentum globally. Survey participants believe that most commercial real estate markets have passed the bottom and are on the rise. Improving markets are characterized by rising demand, falling availability and vacancy and rising headline rents.

Some additional key global findings of Colliers International’s Q3 2010 Global Investor Sentiment Survey include:

• The largest group of respondents put the Global Property Clock for their regions at eight o’clock; the second and third largest groups were at six and seven o’clock, respectively.

• Most Q1 respondents placed their markets at between five and six o’clock.

• Ninety percent of respondents said they planned to expand their current level of real estate holdings within a year or maintain them at current levels.

• New York, Chicago, San Francisco, Washington, London, Sydney, Singapore and Hong Kong were listed as key cross-border investment destinations. Emerging markets mentioned include Poland, Ukraine and Brazil.

• Nearly 80 percent think debt will be easier to access in the next 12 months. Respondents who said they believe the cost of debt would rise in the next 12 months fell slightly from the first quarter of 2010, with 44 percent predicting an increase vs. 52 percent six months ago.

Some additional key regional findings include:

• In Western Europe, 60 percent of respondents intend to make cross-border investments, a notable increase from the figure of 30 percent for Q1 2010.

• 73 percent of Asian investors expect to expand their property portfolio in the next 12 months, up from 65 percent in Q1 2010.

• Looking ahead to the next 12 months, fewer Pacific investors (46 percent) expect to expand their property portfolio compared to the 68 percent who expected to expand in Q1 2010.

• Across Central and Eastern Europe, the range of locations being targeted by investors was quite diverse, although Warsaw remains the most popular destination, notably for office product. Other popular targets quoted were Kiev, Prague, Moscow and Bucharest.

The Colliers International Q3 Global Investor Sentiment Survey was conducted from August 15 to September 7, 2010. More than 200 major institutional and private investors with holdings of US $710 billion and representing a cross-section of property investors around the globe participated. The survey’s primary purpose is to better understand global investor attitudes in the current marketplace at a global and regional level, including investors’ outlook for the coming 12 months.

See complete Q3 2010 report here.

Source: Colliers International



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