CHICAGO-2015 was a big year for cross-national investment in real estate, and according to a new survey from Colliers International, experts expect that the volume of these transactions could increase in 2016. For its latest Global Investor Outlook, the firm received responses from more than 600 investors located throughout the world, including those with private equity, property companies, REITS, funds, institutions, and sovereign wealth funds.
According to the report, gateway cities with liquid markets, such as London, Paris, New York, San Francisco, Tokyo and Sydney will continue to be preferred places to invest. However, most investors believe that global capital will continue to favor the US. And many investors expect to increasingly use debt, rather than equity, to finance acquisitions.
"The US economy's relatively strong performance continues to drive a favorable outlook, particularly in strong coastal and tech markets," according to Colliers. But the rest of the hemisphere may not fare so well. Mexico has some weaknesses in its manufacturing and oil sectors that may affect future outlook. And even though many of the experts surveyed believe Brazil and Argentina will return to positive economic growth next year, both nations suffered general economic declines in 2015. And Canada may experience a a general slowing over the next few years, partly due to changes in the global energy markets.
US investors have shifted their attitudes recently. "Last year none of our survey respondents were looking to sell," Colliers notes, but this time 21% of investors expect to be net sellers this year. In Latin America and Canada, less than 10% of investors expect to shrink their portfolios.
Investors from outside of the Americas will continue to target the top six US markets—Chicago, Washington DC, San Francisco, Los Angeles, Boston and NYC in the next year.
Manhattan continues to be the top draw, attracting more than $4 billion in investment in the fourth quarter alone, according to Real Capital Analytics. And as of early December, foreign investors had already spent $3.27 billion on Chicago-area real estate, well above the region's full-year record of $2.18 billion set in 2013.
Investors also continue to see the industrial market as the top asset class due to solid fundamentals and the tendency of its developers to bring new product to market in a disciplined manner. CBD offices came in second and shopping centers were in third. Latin American and Canadian investors show the most interest in the industrial and logistics sectors.
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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.
