New York attracted the most commercial property investment during the last year, as the global real estate investment market saw volumes increase by 16.7% to US$649 billion, according to Cushman & Wakefield’s annual Winning in Growth Cities report launched yesterday at the EXPO REAL trade fair in Munich, Germany.
The top 25 global cities saw their market share rise from 53% to 55% over the year to June, with volumes ahead by 20.7% compared to a 12.1% rise in the rest of the market.
However, while this group of cities continues to be favoured by investors for their low-risk qualities, there may be signs this heavy focus on core global cities is starting to waiver as investors seek new opportunities — market share of the largest 25 cities is down from 58% in Q1 2013 to 50% in Q2 2013, according to the report.
Carlo Barel di Sant’Albano, Cushman & Wakefield’s executive chairman, commented: “Most indicators suggest property demand will both increase and broaden to embrace new markets and a higher share of investment will be cross-border as investors increase their risk tolerance.
“Assuming the US recovery continues to gain traction helping confidence and growth across all economies, we anticipate that next year will be favourable for much of the market as stimulus measures and recovery spark an appreciation in capital values for good quality space with strong occupier demand.”
The make-up of the top 25 cities has changed little from last year, with Beijing and Stockholm dropping down the list and Denver and Frankfurt moving up as US and German cities outperformed.
New York is the largest global real estate investment market for the third consecutive year – with volumes rising 39% to US$49.2 billion in the year to Q2 2013
London holds onto second place overall with a 6% increase in investment volumes which totalled US$32.3 billion
The biggest gainers were Austin, Milan, Las Vegas, Montreal and Tampa. North America in fact had 15 of the top 25 fastest-growing markets, with 14 in the US plus Montreal — this is predominantly due to earlier signs of economic recovery and the weight of domestic capital in the North American market.
Four cities from Europe made the top 25 (Milan, Frankfurt, Berlin and Hamburg) while Asia took six spots: Seoul, Perth, Brisbane, Sydney, Nagoya and Osaka.
Paris was the main faller in the top 10 — from fourth last year to eighth position this year — due to a drop in larger deals.
Other major cities to slip down the rankings include Toronto and Chicago but some of the more notable were in China – Shanghai, Beijing, Guangzhou, Chengdu and Tianjin were all down by 40% or more excluding development land sales; this is largely driven by a reduction in domestic, rather than cross-border, spending. A number of European cities also fell – led by St Petersburg, Istanbul and Budapest.
Offices are the most in-demand sector in the top 25 cities for investor capital but they did lose market share during the last year from 48% to 45%.
Residential was also a big winner, moving up to 26% market share from 18.1%. Although to date many of the largest global players have focused on offices, they are now broadening their interest to other sectors and in particular looking at large mixed commercial and residential developments.
A recovering housing market has stoked US buyer interest, but demand has also been very strong on the debt and equity side across all US sectors. With risk tolerances improving, interest has spread away from core cities to embrace secondary cities.