In Cushman & Wakefield’s Global Investment Atlas 2019 report, Asia Pacific continued to attract the greatest amount of investment, accounting for 50% of transactions in 2018 including development land. European volumes fell by -10.0% y/y, to reflect the region’s lowest ever share of investment, whilst the North American real estate market outperformed, documenting growth of 16.9% y/y, and a 31% share of total investment.
While domestic investors retained the majority of transactions volumes, all sources of capital targeting the APAC region increased investment. North American buyers were the strongest source of global investment into the region, driven by high demand for the Chinese market. Indeed, despite trade tensions between the US and China, US buying in the country reached record levels last year, particularly in Shanghai.
Sector Trends
While development sites were the target of 80% of investment in the region, previous records were also surpassed in the office and industrial sectors, while the hotel market reached its strongest point post-GFC. Retail and multifamily were the only sectors to experience a contraction in annual volumes last year, at -4.8% and -64.8%, respectively.
As in 2017, China attracted more than three quarters of volumes into the region. While the developed APAC economies of Japan and New Zealand experienced volume declines, growth was documented across the majority of emerging markets, driven by strong demand from domestic and regional buyers, and Australian volumes surpassed their previous 2015 peak.
Prime office rents continued to climb across China, Australia, Singapore, and Japan, due to demand outstripping supply in core markets. Prime yields experienced a modest contraction across the majority of markets, with further capital value growth set to continue into 2019.
Market Outlook
European and Asian institutions are still increasing their allocations to real estate, and both regions are also likely to see more inbound cross-border demand, notably Europe in the short term, and Asia in the medium term as investors follow the demographic trends.
China specifically will continue to draw in global interest, with more encouragement for inbound investment from central government and more opportunities emerging as an increasing number of Chinese developers and investors look to trade assets to improve their cash flow. With deleveraging policies remaining in place, outflows will be slow to recover but should steadily improve once policy is softened and as the Go Global China policy moves on.
To get the full data and insights, download the Global Investment Atlas 2019 report.
