Where do the top real estate investors around the world think the markets are heading?
More than eight of ten U.S. real estate investors are planning to expand their real estate portfolio in the next six months, according to the 2011 Colliers International Global Investor Sentiment Survey released today. The survey takes the pulse of property investors worldwide, measuring their appetite for risk, optimism, key concerns and sense of market cycles. The expansionist mentality in the U.S. was echoed around the globe.
“Far more investors are looking at expanding their portfolios compared to last year,” said James W. Horne, executive sponsor of Colliers’ Global Investor Sentiment Survey. “However, talk of a double-dip recession continues to occur. Toward the end of 2010, most economic commentary was becoming more confident; however, this is not the case now.”
The majority of U.S. investors responding to the survey opined that the market cycle was on the upswing, between the 6 o’clock and 8 o’clock position. The bottom of the market is represented by the 6 o’clock position, the peak at 12 o’clock, upswing at 9 o’clock and downswing at 3 o’clock. Most investors said that over the next year, the market would be between 8 o’clock and 10 o’clock.
The overwhelming determinant of whether U.S. investors would be able to grow their portfolios was the supply of properties for sale, with 62 percent citing it as their primary concern. Raising new equity and access to debt were the second and third most cited determinant at 20 and 11 percent, respectively. Despite these concerns, 60 percent of U.S. investors said they are willing to take on more risk.
“Most U.S. investors say they are moving further out on the risk curve relative to six months ago,” said Warren Dahlstrom, president of Colliers International’s U.S. Investment Services Group. “This most likely reflects the dearth of low-risk, fully leased prime real estate currently on the market, and investors being forced into secondary markets and accepting a degree of vacancy.”
According to the survey, U.S. investors’ expectations for return on investment were spilt evenly across the board. About one-third of respondents sought returns in the five to 10 percent range, one-third was looking for returns above 15 percent and just less than a third (32 percent) were in the middle, seeking returns of 10 to 15 percent.
While U.S. investors did not specify a single city, state or region as the target of their investment dollars, many remained focused on primary markets in California, Texas, New York/New Jersey, Washington and Boston. Industrial and multifamily were the market segments respondents said were most desirable, followed by office and retail. Most U.S. investors also expressed a desire to purchase domestic property, but there was an increase in the percentage of respondents who said they were willing to invest overseas. Of those, Canada, Australia and Brazil were top choices.
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