Back on track: promising year to come for commercial property
It’s been a chaotic year for real estate and foreign property investments but markets weakened by the 2008 financial crisis are finally back on the map. Others, however, remain subdued and some have simply crashed and failed over the last 365 days. Residential markets are on the road to recovery and commercial property investments have reached levels last seen in 2007. Here’s the Tranio
– Chinese become the world’s most prominent buyers
– America’s Federal Reserve takes the plunge and raises the interest rate
– Spain has clawed its way back to top property destination
– Global commercial property activity reaching
Commercial property charges ahead
Commercial property investments are finally on track to meet or potentially exceed the
The situation on U.S. commercial property markets confirms solid growth. Investment volumes there will total $435 billion by the end of 2015 and, by Q3 2015, America’s commercial transaction volume already composed 51.8% of the global market
€237.8 billion in Europe
highest rolling investment volume ever recorded
$435.0 billion in the U.S.
total investment volume forecast for 2015
85.0% in UK and Germany
Q3 capital inflow from
72% of real estate investment activity
Total real estate investment activity in Europe is also back on track. By the close of Q3 2015, rolling annual volumes hit their highest point on record at €237.8 billion (about $264 billion) according to Cushman Wakefield, an international real estate services firm.
Foreign investment activity spiked in the UK and Germany between July and September as 85% of capital inflow came from
Office, retail and other commercial property segments remained most popular throughout the year, with investments topping $54.6 billion in Britain and $24.0 billion in Germany during the first six months of 2015.
However, suppressed yields in the office segment have pushed foreign investors to diversify away into more niche segments such as retirement homes and student property where yields are higher, occupancy is over 90% and future demand is high.
Niche commercial segments in the UK
|Student residences||Retirement homes|
|Occupancy||99%+ in Purpose Built Student Accommodation (PBSA)||90.0% + occupancy rates in all facility types|
|Forecast||Number of enrolled students to double by 2025||Over 65s to compose 23% of total population in 2035|
Cities in demand
Commercial investments are flowing straight into a limited number of cities, the majority of are located in the Western Hemisphere. 72% of all commercial real estate transactions and 69% of
In fact, 53% of all
Rumours of a bubble on hot markets, particularly in New York, have died down and the Federal Reserve’s decision to raise the interest rate to 0.5% is not expected to affect investment activity there in the near future.
In Europe, Germany's «Big Seven» cities distinguish themselves in terms of commercial investments into all segments. By October, €38.1 billion had already been invested compared to €39.8 billion for the whole of 2014 according to CBRE.
World’s Top 10 real estate markets, H1 2015
Germany’s seven leading cities — Berlin, Frankfurt, Hamburg, Dusseldorf, Cologne, Munich and Stuttgart — attracted much attention in 2015. Overseas buyers concluded 53% of all commercial property transactions there during the first nine months of the year. There is enormous pressure on the housing market, leading to occupancy rates over 90% and annual price dynamics of +9.5% on average.
Foreign investors are now, more than ever, reliant on the economic and political stability of the West’s leading economies.