MIPIM: Property Investments to Jump to 2007 Levels

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Cushman & Wakefield expects global commercial property investments to exceed $1 trillion in 2013, hitting levels not seen since 2007.

Overall investment volumes could increase by 14 percent in 2013, carrying over momentum from the fourth quarter of 2012, the property firm announced during the MIPIM property show taking place in Cannes.

"We anticipate there will be less uncertainty this year and in fact, a true change in market confidence," said Glenn Rufrano, chief executive of Cushman & Wakefield.

The increase in investment levels will be led by activity in North America and Asia. Investment volume in North America could increase by 15 to 20 percent this year, the firm predicts.

"Early signs of a recovery in occupational demand together with an improving economy and debt market, low vacancy and high liquidity augers well for investment demand and performance," the report states.

But the firm expects cap rates to "flatten out" as investment activity picks up.

"While the U.S. will be a preferred investment market for yield, investors will have to move up the risk curve possibly through buying vacancies in top tier markets or acquiring top assets in secondary markets," said Greg Vorwaller, head of global capital markets. 

Cushman & Wakefield's forecast is similar to conclusions presented during the show by DTZ, which also predicted growth in North America, albeit at more modest levels.

The Asia-Pacific region could also see a 15 to 20 percent increase in activity, Cushman & Wakefield predicts:

"Improved macroeconomic conditions with sustainable growth across the region will boost activity and performance. Investment demand will increase as faith grows in China's soft landing but demand will also broaden and other markets such as Australia and Japan will be an increasing target for overseas investors while markets such as India and Indonesia are likely to be on the rise. Long term trends such as urbanization and the increasing middle class will add to demand to access a range of sectors including residential, especially in Chinese cities as well as higher growth markets as Indonesia and Vietnam."

The U.S. and China were the best performing markets in the world in 2012, the report says. But Spain, Poland, Norway, Switzerland, Indonesia, Thailand, India and Australia also reported an uptick in activity.