Investors earmark $281 bln for global property

Investors earmark $281 bln for global property

U.S. sees largest rise in interest as market there bottoms; Funds earmarked for EMEA flat in 2011, up for Asia-Pac, US.

October 13, 2010 1:20 by Reuters

An estimated $280.6 billion of capital will be available to invest in global commercial real estate in 2011, with the U.S. market drawing the most buyer interest as it bottoms out, a report said on Wednesday.

Property consultant DTZ said the available capital for 2011 is 22 percent up on an estimate made in December 2009, with $97.4 billion (up 54 percent) for the United States, $111.8 billion (flat) for EMEA and $71.4 billion (up 29 percent) for Asia-Pacific.

“The current attractiveness of the U.S. is in stark contrast to the situation a year ago. Most U.S. markets were cold, offering expected returns below risk adjusted required returns,” said Nigel Almond, DTZ’s associate director of forecasting and strategy.

“This opportunity remains largely unexploited to date, since transaction volumes in the U.S. have not yet seen the levels witnessed in Europe and Asia Pacific,” he said.

The shift in interest is in line with an earlier report by DTZ, which found prime commercial property in the United States and Asia-Pacific was more attractively priced on a five-year horizon than in Europe and Britain.

Quoted property companies, many having raised capital to repair their balance sheets during the global financial crisis, are back on the market, equating to 17 percent of investors, up from 4 percent in the end-2009 estimate, DTZ said.

The amount of capital targeting assets in a single country is also significantly higher, again due to heightened interest in the United States, where some analysts predict the hard-hit office market has hit a bottom.

The proportion of capital eyeing single countries next year rose to 44 percent, from 30 percent at end-2009, with about half of those funds looking at the United States alone, DTZ said.

(Reporting by Daryl Loo; Editing by Andrew Macdonald)