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Global investors’ $1.16tr to target core CRE in 2016: CBRE

While the survey responses indicate a jump in demand for core assets, interest in "secondary, value-add and alternative opportunities" has declined.

Global investors plan to unleash approximately $1.16 trillion of capital for global property investment in 2016 — an increase of 3 percent from 2015, according to CBRE’s latest Global Investor Intentions Survey.

The majority of investors, or 82 percent, indicated that their buying activity will increase or remain the same compared to 2015. But while the survey responses indicate a jump in demand for core assets, interest in “secondary, value-add and alternative opportunities” has declined.

imgresThat stems from concerns about rising US interest rates and global volatility, which could widen spread between prime and secondary yields and cause lenders to shy away from riskier deals.

“Investment strategies are shifting amid concerns about the health of the global economy,” said Chris Ludeman, global president of capital markets at CBRE. “Not surprisingly, 2016 looks likely to be a ‘risk-off’ year, with investors reporting they are more focused on core assets and less likely to seek secondary, value-add and alternative opportunities.”

North America is the most popular destination for investment (48 percent), followed by Western Europe (28 percent), with investors across the board expressing a  preference for gateway core cities: in the US, Los Angeles, New York and Dallas-Ft. Worth are the top three targets.

Offices remains the preferred asset class globally (30 percent of respondents), though interest is down slightly compared to last year. There is a notable uptick in interest for retail (21 percent) and multifamily assets (20 percent) from 2015.

The 1,250 responses were collected in January and February from pension funds, insurance companies, fund and asset managers, sovereign wealth funds and banks across the globe.