The US is the centre of considerable property investment interest of late, with research from broker DTZ showing that real estate equity increased by 19 per cent to USD 55 billion (GBP 36.8 approximately) in the second half of 2012. Bloomberg reported that commercial property is also rapidly gaining in value and could soon be back to peak levels, according to data from Green Street Advisors Inc. What's more, this positive performance looks set to continue, with an 80 per cent likelihood of commercial real estate price rises during the year. This follows a one per cent hike in February.
Continued verve for US investment appears to be undeniable, but the DTZ report hints that conditions may not be as favourable as some would have us believe. Bloomberg revealed that the amount of new capital committed to real estate investment fell more than 30 per cent to USD 34 billion, with money managers unable to meet target dates for fundraising. Hans Vrensen, DTZ's global head of research, stated: "Funds continue to remain focused on their home market or region, reflecting the uncertain market environment and investors’ risk aversion."
Nonetheless, 43 per cent of all global real estate funds are being raised to target the US market and prices stand within one percentage point of the 2007 high. While the sequester will no doubt affect performance, Mike Kirby, Green Street's director of research, told Bloomberg that the industry isn't worried. "We're effectively back to peak prices. We're fairly confident that the rebound will continue," he said, adding that the increase in the number of commercial mortgage-backed securities being issued is helping to drive demand for lower-quality properties and keep the market active.
What's more, many industries will have prepared for the sequester, factoring it into yearly projections. The hotel sector is just one segment that has planned for this event, according to Mark Woodworth, president PKF Hospitality Research, LLC. He told the World Property Channel that important fundamentals remain positive and 2013 looks set to be a good year.
- Friday 15 March 2013