DTZ Research predicts 22% increase in available capital for global real estate investment in 2011

DTZ Research, part of global real estate services firm DTZ, estimates that US $281 bln. of capital will be available to invest in global real estate in 2011, a 22% increase on DTZ's previous estimate in December 2009.


"Of the single country funds, the UK is the most targeted country for investment within the region".

The latest 'The Great Wall of Money' report launched today, October 13, 2010, analyses the capital being raised by an extensive range of investor groups. The greatest increase in available capital is forecast to be focused on the US (US $97 bln.) representing a significant 54% increase on our December 2009 estimate. This is in line with the DTZ Fair Value Index™ score of 89 which shows most markets in the US now offer an attractive opportunity to investors. A further US $71 bln. is targeting the Asia Pacific region, an increase of 29%. Whilst the majority of available capital continues to target Europe (US $112 bln.), this is unchanged from our December 2009 estimate.

Nigel Almond, Associate Director of Forecasting & Strategy at DTZ and author of the report comments: "The current attractiveness of the US is in stark contrast to the situation a year ago. Most US markets were cold, offering expected returns below risk adjusted required returns. This opportunity remains largely unexploited to date, since transaction volumes in the US have not yet seen the levels witnessed in Europe and Asia Pacific."

The DTZ report highlights the return of quoted and private property companies to the market with publicly listed companies now comprising 17% of available capital, compared to 4% reported in December 2009. Capital from private property companies and individuals now accounts for 14% of available capital, rising from 3% previously. Third party managed funds, whilst still accounting for the majority of available capital, have decreased their share from 77% to 49%.

DTZ Research data proves that diversification by both geography and property type continues to be a priority for investors. In line with the previous analysis, the majority of capital is due to be invested in multiple countries. However, this share of capital has decreased from 70% to 56%, highlighting a growing focus on single country investments. Of those investing in single countries, there has been a significant increase in funds targeting the US. The US now accounts for 51% of available single country focused capital.

The research also reveals that both Asia Pacific and Europe will continue to be targeted with a higher share of capital, compared to the amount that has been raised in these regions. This suggests an increase in cross-border investment in 2011. The recovery of cross-border investment flows would be from a low base given the significant retrenchment in recent years.

During the first half of 2010 global investment volumes increased substantially to US $133 bln., double its level in the same period of 2009. Growth in Asia Pacific tripled, rising to US $64 bln. compared to the same period last year. European investment activity totaled US $54 bln. representing an 86% increase.

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