Despite the geopolitical uncertainty and the slowdown in the business cycle, the global property investment reports a significant growth of 18% on year-on-year basis and reached a new record of 1.6 trillion EUR (1.8 trillion USD) in the year to June 2018. This shows the annual Winning in Growth Cities report of the consulting company Cushman & Wakefield. It explores the investment activity in the world’s business properties by assessing cities according to their success in attracting capital.
The 18% growth in investment in business property is mainly due to Asia, which is both a source of capital and an investment destination, accounting for 52% of total activity, and Asian buyers account for 45% of cross-border investment.
“There is no shortage of capital in different areas and risk profiles. Indeed, we observe that many investors are increasing their capital and developing strategies to allow for diversified supply and risk tolerance, “said Carlo Barel di Sant’Albano, head of Global Capital Markets at Cushman & Wakefield. “These are the key factors determining whether volumes will continue to grow. In the current environment, they may exceed current levels by up to 2% next year. The growth is likely to be mainly due to global buying, but investors need to closely monitor structural changes in the rental market as an opportunity and challenge”, added he.
New York remains the largest urban property market in the world, followed by Los Angeles and London, while Paris rises to fourth place before Hong Kong.
In the top ten cities with the largest volume of attracted investments, six are located in the US, while Europe and Asia are represented by two. Despite the political uncertainty surrounding the Brexit, London has retained its position as a leading European market, mainly thanks to several significant transactions in office buildings.
However, the growth of North American transactions slowed down. In the rest of the world, the volumes reach their highest level in three years. The Asia-Pacific region is jumping by 32% on an annual basis, while Europe’s transaction growth is over 16%.
For the ninth time in the last ten years, London is the city that attracts the most international property investment. Asian investors, who have increased transaction volumes by 47% on an annual basis to 10.9 billion USD, are the strongest source of cross-border capital in the British capital, with offices being the primary focus of such deals. The sector is attracting a market share of 94% of the capital of the Asia-Pacific region in London.