Colliers International are pleased to share with you the results of our 2016 Global Investor Outlook. The survey has found Australia remains a top destination for investment, popular with both local and offshore investment. On a global basis, only London ranks higher than Sydney and Melbourne as cities that investors want to be in.
To inform the report, more than 600 global investors – from sovereign wealth to private equity firms – shared their global and regional forecasts for 2016 and beyond.
Local trends to emerge from the survey include:
- Globally, more than half of all investors are looking to expand their portfolios
- Australian and New Zealand investors continue to view CBD office as their preferred investment class, followed by residential development sites as the second most popular investment class.
- Domestic investors remain unwilling to take on higher levels of risk to achieve higher returns, and are ranked among the most risk averse investors globally.
SIX KEY THEMES THAT WILL SHAPE COMMERCIAL REAL ESTATE IN 2016
1. Real estate continues to grow its appeal
Sentiment towards real estate remains positive. More than half of the respondents with multi-asset portfolios said that they would increase their real estate allocations in the next 12 months into 2016. The US will be a preferred destination for global capital.
2. Liquid markets still preferred
Global gateway cities (London, Paris, New York, San Francisco, Tokyo and Sydney) remain the primary target for global cross-border investors over the next 12 months. These markets have the advantage of offering large lot sizes and volume of stock that appeal to global mandates.
3. Seeking value
2016 will see a greater emphasis on secure income and asset management to drive performance. For some investors ‘overcrowded’ core markets are being seen for longer-term investments rather than short term trading.
4. Risk appetite moderated
International investors remain confident. While economic volatility and geopolitical events may have a short-term impact, long-term strategies remain driven by market fundamentals.
5. Local partnering
Our survey results show that more global investors will partner with local expertise and acquire platforms as a means of placing substantial amounts of capital with confidence.
6. Return of debt
In 2016 more investors will use debt to finance their acquisitions, despite increased interest rates in some territories. This suggests that the equity phase of the cycle is giving way to the debt phase.