Business / Industries

Global property to gain from increased market in 2016

By Zheng Xin ( Updated: 2016-03-24 17:01

A newly released report forecasts that property trading will hit a new record in 2016 with 4 percent growth globally.

New sources of capital, unsatisfied demand and a strong supply of debt are likely to result in global real estate trading activity rising 4 percent to reach a record $1.34 trillion in 2016, according to a newly released report by Cushman & Wakefield.

"Geopolitical issues, length of the recovery cycle, volatility and increased uncertainty are leading to differing views with respect to asset allocation and how best to invest," said Carlo Barel di Sant'Albano, chief executive of Cushman & Wakefield's Global Capital Markets & Investor Services business.

"This is benefiting real estate as allocations to the sector increase, boosting demand for assets," Sant'Albano said.

"In this economic environment there is also an increasing number of willing sellers aiming to crystallize returns, and we therefore forecast a 4 percent increase in trading this year, which could easily be bettered if current global volatility levels stabilize or decline."

According to the Atlas Outlook 2016 report, which reviews international investment patterns from 2015 and anticipates market performance for the year ahead, global property trading activity fell last year for the first time in six years, albeit edging down just 2 percent to $1.29 trillion.

Excluding land, global volumes rose 8 percent, with particularly strong increases for multi-family residential and hospitality, followed by logistics.

Currency fluctuations continue to impact regional volumes, which attracted investors towards the US while diluting volume growth measured in other currencies, it said.

Despite the decline in 2015, Cushman & Wakefield forecasts trading volumes will reach new heights in 2016.

According to Sant'Albano, performance is yet to peak, with yields not yet at their floor and a slow improvement in occupational demand pushing rents slowly ahead.

"The short-term cycle favors offices, with growth in prime rents of 4 to 5 percent forecast across major US gateway cities such as New York, San Francisco, Los Angeles and Boston," he said.

"Elsewhere, similar gains are expected in London, Dublin, Stockholm, Madrid, Sydney, Shanghai and Tokyo."

In Asia-Pacific, the region generally performed well in 2015, with strong demand compressing yields and positive space absorption typifying core occupier markets, the report said.

Looking ahead, Asia-Pacific is expected to return to positive volume growth in 2016, with land markets stable and demand for built commercial space steadily increasing.

China will remain an economic powerhouse, it said. Although questions will remain for future years as China's transition continues, a sensible central case for assumptions this year is for slower growth, not a reverse.

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