CRE Investment Expected to Rise by 50% in 2021’s Second Half

Global investors are optimistic the market will rebound in 2021, according to new research from Colliers International Group. 

The firm’s new Global Capital Markets 2021 Investor Outlook anticipates investment activity will pick up by 50% in the second half of the year as vaccine rollouts continue, additional government stimulus funds begin flowing and confidence in property markets swells. Approximately 98% of investors across all regions globally are looking to expand their portfolios, with 60% seeking to increase by more than 10%. Around 88% of U.S. investors polled plan to make their next investment as early as the first quarter of 2021.

The report drew from nearly 300 respondents, including institutional investors, listed property companies, sovereign wealth funds, private equity funds, family offices and third-party money managers. It reveals that investors are sitting on substantial amounts of dry powder and anticipates the rebound will gain serious speed in the second half of the year as concerns over global travel begin to abate. 

“Based on our global analysis, which gives us a bird’s-eye view of investors’ interests and expected appetite, longer-term tailwinds in the property sector remain intact. With a massive volume of equity raised globally and the need for real assets, investors are eager to deploy pent-up capital and pursue opportunities during the year,” said Tony Horrell, head of Capital Markets Global at Colliers International. “We expect to see movement up the risk curve this year, with investors exploring all types of assets from senior care homes to public infrastructure projects.”

An increased amount of capital, combined with low interest rates and increased debt financing, is expected to reinvigorate investment in 2021, but major metro areas and destination markets will likely take longer to bounce back. Asset classes like office, senior housing, hotels and shopping centers will also be slower to rebound to pre-pandemic levels. 

Logistics and living sectors are among investors’ top three choices across all regions, according to the report. “Intense demand for these assets will require investors to broaden their geographic focus and build portfolios through joint venture platforms and local partnerships,” it said. In contrast, investors are expecting to see pricing discounts of over 20% for retail and hospitality assets. Rising demand for alternative assets such as data centers, senior living and life science assets reflects broader structural shifts amplified by the pandemic, the report also noted.