15.02.12New CBRE Global ViewPoint Highlights Opportunities and Risks in Year Ahead
Macro-economic and political landscape uncertainty suggests that a cautious outlook for commercial real estate is likely to persist into 2012 according to a new report from CBRE Global Research. The Global ViewPoint for 2012 notes that high quality real estate assets in prime locations should continue to perform well compared to secondary real estate and very competitive with regard to other asset classes.
“With the level of uncertainty today, it is inevitable that the outlook for real estate will in many ways be equally unclear,” said Raymond Torto, CBRE’s Global Chief Economist. “It is important to note, however, that the perception of the inflation-hedging capabilities of core real estate holds considerable appeal to investors and commercial real estate will offer competitive risk-adjusted returns relative to many other asset classes in 2012.”
The CBRE Global ViewPoint analysis anticipates that occupiers in 2012 will continue to exercise caution in their decisions, and demand for space will remain moderate. Investors in Europe and Unites States will therefore tend to adopt more defensive strategies, focusing on high quality buildings in prime locations within the most liquid and transparent markets.
“In periods of market volatility, core real estate will continue to provide shelter to risk-averse institutional investors,” said Asieh Mansour, Ph.D., CBRE’s Head of Americas Research. “As such, in 2012 the highly liquid U.S. commercial real estate market should easily attract the greatest share of both domestic and cross-border capital flows.”
A lack of new construction in many markets globally will also boost the performance of existing prime properties.
“Current supply shortages in many of today’s core markets have positive long-term implications for supply/demand balance, even in sub-normal economic growth periods,” added Dr. Torto.
The report notes that value-add investment strategies are more directly dependent on the economy’s growth or recovery, and are therefore likely to be less popular in this environment. As a result, secondary property will continue to underperform from an investment point of view.
Previously, the stronger economic prospects for Asia meant that investors there have been more aggressive. But the CBRE analysis finds that with economic growth starting to slow in China—and concerns about the global impact of the economic slowdown in Europe and slow growth in the U.S.--occupiers and investors are also becoming more cautious in many markets across Asia.
About CBRE Group, Inc. CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue). The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com and www.cbre.kz