US Investors 'Becoming More Risk Averse'

Investors targeting US capital markets are less inclined towards risk in their portfolio than they were earlier in the year...

Investors targeting US capital markets are less inclined towards risk in their portfolio than they were earlier in the year. This is one of the findings of a report by Jones Lang LaSalle, which revealed that problems across global markets and particularly in the eurozone are weighing on investor sentiment towards commercial real estate markets. Jay Koster, president of the Americas capital markets division at the firm, commented: "Given the recent worldwide market volatility, investors' overall desire for risk has become muted and they remain very price sensitive for any additional market or fundamental risk they are undertaking outside those prime markets."

However, Jones Lang LaSalle predicted that by the end of 2011, investment volumes across all commercial property sectors in the US will have increased by between 50 and 55 per cent, compared to 2010. The organisation also noted that the office market has put in a particularly strong performance so far this year, with the number of transactions taking place up by 55 per cent during the third quarter, compared to the same three months a year earlier. In addition, the market for multi-family properties has experienced rising demand among investors, with transaction volumes for the year to date up by 70 per cent compared to the same period in 2010.

Last month, Bloomberg Businessweek reported on data in the Moody's/REAL Commercial Property Price Index, which saw capital values of such assets climb in August for the fourth consecutive month. The price of properties in this sector increased by an average of 2.4 per cent in this period, the research showed. Speaking to the news resource, Robert Bach, chief economist for Grubb & Ellis, noted that investors are displaying greater caution over the deals they get involved with. The Moody's/REAL index also found that the number of transactions for distressed commercial real estate reached its lowest level since January 2010.

- Thursday 03 November 2011

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