CHICAGO- China and other Asian countries have attracted lots of interest, but DTZ researchers say that North America remains the most attractive market. The Chicago-based firm has just released their study “Money into Property 2013 North America,” the first such edition produced on the region. They found that global investment transaction values of commercial real estate in 2012 increased 3.5% to $475 billion US with North America seeing a 15% increase, making it the fastest growing region.
“US markets are classified as the most attractive region, ensuing future volume growth,” the report states. “Considering the high level of market liquidity, we would expect more international investors to focus on the U.S. going forward.”
John Wickes, the head of the North American research division, says their Fair Value Index for the U.S. has hit its highest level since 2005, making it the world's most attractive region. Out of 201 global markets analyzed by DTZ, more than two-thirds were classified as attractive, or “hot,” while others were “warm” or “cold.” In the U.S. 26 out of 35 were classified “hot,” and the rest were tagged as “warm.”
“This is not really surprising, given that our classification is based on the difference between expected and required returns for each market,” he adds. “Lower bond yields and reduced investors' risk aversion have brought down the required hurdle rate well below our forecasted market returns. In many markets, the prolonged lack of new development activity and modest improvement in demand for space has also increased our expected returns. The net effect of these two trends is that all North American markets are classified as attractive.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
