July 22, 2015

Record invested into commercial property stock

Record invested into commercial property stock

According to the 41st annual Money into Property report released by DTZ, global commercial real estate invested stock increased in 2014 by 5 percent, reaching a record level of USD 13.6 trillion.

Asia Pacific benefitted from the strongest increase as stock grew 10 percent to USD 5.1 trillion. North America saw 5 percent growth from USD 4.0 trillion to USD 4.2 trillion. European invested stock remained at the level of USD 4.4 trillion; however, in Euro equivalents the stock saw an increase of 2 percent to €3.4 billion, passing its 2007 peak of €3.3 billion.

The strongest growth in commercial real estate stock during 2014 was seen in Turkey (a 30 percent increase), while the weakest growth market was Russia (an almost 20 percent fall), which stems from the sanctions imposed by the European Union and hostilities in Ukraine.

With the value of equity continuing to grow ahead of debt, we have seen aggregate gearing shrink further. As a result, the global average gearing fell to 55 percent last year, compared with 56 percent in 2013.

As of the end of 2014, global investment market volumes reached USD 633 billion, which is a 20 percent increase on 2013. At 32 percent, Europe saw the most significant growth of investment transactions value. DTZ experts estimate the global real estate investment volumes to reach USD 771 billion in 2015.

DTZ analysts expect a record-breaking USD 429 billion to be invested globally in the commercial real estate market in 2015.

“The commercial real estate market in Europe is exposed to the risk of rising interest rates. This could result in a lower investment activity and lead to a reversal in the flow of equity, which may in turn influence the valuation. However, the real estate market remains attractive compared to other classes of assets. We expect the European transaction volume this year to increase by 10 percent to USD 280 billion, and the investors’ appetites to remain high well into 2016,” said Craig Maguire, Head of Capital Markets at DTZ.

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