More than half of investors plan to increase real estate allocations within multi-asset portfolios, according to the Global Investor Outlook for 2016 by Colliers International.
Of the more than 600 investors Colliers surveyed, 52% indicated they will increase fund allocations to real estate in 2016, while only 11% plan for a decrease. Real estate investment is therefore on track for continued growth in 2016, with particular focus on prime locations in continental Europe.
Primary target markets will continue to draw the most interest, with moderating risk appetite, stable economic conditions, and low interest rates driving increased investment in secondary markets. Overall, direct property investors have moved in line with economic trends across Europe. In the first three quarters of 2015, total volumes reached €200 billion, up 30% against the same period in 2014.
European volumes are expected to increase further in 2016 driven by a variety of prime markets and attractive lending conditions. However fewer investors expect to be net buyers. US investors remain committed to Europe, with a third of them planning to invest in EMEA during the next 12 months. This is being particularly driven by opportunity-led American private equity which is shifting from UK to continental Europe because it can achieve higher returns.
Investors from outside EMEA will typically have more of a narrow focus around London, Paris and the key German cities, with Madrid also on the radar. Asian capital will continue to focus on London and German cities in 2016, underscoring investors’ reduced appetite for risk.
The UK, Germany and France are investors’ primary targets in EMEA in 2016. Outside the core, Spain ranks higher than the Netherlands and Italy. CBD offices will be EMEA investors’ preferred sector in the next 12 months, followed by industrial and logistics in the UK and shopping centers in continental Europe.
