Global Investments to Hit $1.33 Trillion in 2014

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Global property investment transactions totaled $1.18 trillion in 2013, increasing 22.6 percent from 2012 to the highest total since 2007. A combination of improving market conditions led to a strong performance in 2013, according to a report from Cushman & Wakefield. 

"The real estate market ended 2013 on a high on the back of greater confidence and rising liquidity and that momentum is building further this year with signs of a firmer occupier market as well as greater investment demand and new sources of debt set to drive investment activity and property pricing higher," David Hutchings, head of EMEA investment strategy, said in the report. 

While all regions witnessed positive growth last year, Asia led in investment volumes, increasing 25 percent to $568.6 billion, accounting for 48 percent of the market. The growth in China, Japan and Australia offset declines in Taiwan, India, South Korea, Hong Kong and Thailand. 

A strong final quarter drove volumes in EMEA to a six-year high of $246.3 billion in 2013, 23 percent higher than the previous year. 

"Overall demand is still rising as institutional allocations are raised and foreign interest increases," Jan-Willem Bastijn, Cushman & Wakefield's head of EMEA capital markets, said in the report. "Greater debt availability and lower pricing is adding to buying power and while still restricted to prime in many areas, risk appetite among lenders is improving, leading to a slow broadening in availability."

Investments in Latin American markets dropped 13 percent in 2013 to $5.7 billion after a weak second half. Even though domestic investment increased 38 percent, foreign investments fell 61 percent to just 21 percent of the total, its lowest markets share in three years, C&W reports. 

The North American region recorded the best quarter since 2007 during the fourth quarter of 2013, with overall volumes increasing 19 percent to $359 billion, 30 percent of the global market.  

Looking ahead to 2014 investments, the firm expects increased demand for property due in part to a realistic appraisal of the macro environment and the availability of stock.

"We are forecasting a 13 percent rise in investment globally to $1.33 trillion in 2014, with the US and Western Europe driving the increase," Mr. Bastijn said. "At the same time yield pressures will push capital values up, with the yield gap between prime and good secondary closing as investors reappraise and re-price risk.  Rising interest rates will put a ceiling on how far yields can move but the sector has a cushion in high yield premiums and pricing will also benefit from a slow return of occupier demand."