There is strong positive sentiment around the performance of the US economy, which stands in sharp contrast to views of the global economy.
According to the first-ever Real Confidence survey by CRE services firm Altus Group, CRE C-suite executives rated their confidence in the US economy as 63.3 compared with 45.4 for the global economy. This was based on a scale of zero for no confidence, up to 100 for absolute confidence.
The respondents – drawn from real estate funds, private equity firms, listed REITs and debt-driven organisations, representing $700 billion in assets under management – rated the US real estate industry as a healthy 68.5 and expressed better-than-average confidence (58.9) that real estate development would increase.
The study found that real estate is about “location, location, location” with a score of 83.1 saying it had the biggest impact on real estate returns.
When it came to views on alternative investments, a slightly positive score of 50.8 was recorded when investors were asked whether they would branch out into lesser known areas and expose themselves to additional risk.
A fairly confident score of 58.5 greeted the question of whether e-commerce and mobile shopping would reduce the demand for square footage in retail.
In response to whether the tumbling oil price would have a positive impact on real estate, the confidence level dipped into negative territory at 45.6.
The execs were asked to allocate a theoretical $1 billion into whatever real estate investment option would yield the highest return in 2016. Almost half (49.3 percent) chose private equity, 31.2 percent REITs, 13.3 percent private debt and 6.2 percent public debt.