Global investment volumes are forecast to rise 30% this year, hitting $478 billion (€362 billion), led by a reviving US market, according to Cushman & Wakefield's 2010 Global Investment Atlas which monitors investment flows in commercial property in 56 countries.
The new report, to be launched on 16th March at MIPIM in France, suggests that this figure is likely to be even higher if the economic recovery remains on track. In 2009, global investment volumes fell 23% to $365 billion (€270 billion), their lowest since 2003. However as markets started to recover and global liquidity improved, investment volumes ended the year on a much stronger note – rising 104% between the first and second halves of the year.
The upturn was led by Asia Pacific and most notably China, with a 39% increase in investment on 2008. China is now the largest real estate investment market in the world, with the next most dynamic recovery market, the UK, up to second and the USA down to third place. (If apartment sales are included in this figure the USA would take second place.)
"While challenges clearly remain and a double-dip can not be ruled out, a higher risk
appetite among financiers and investors will continue to fire the market," commented David Hutchings EMEA head of research at Cushman & Wakefield. "With the recovery now backed by local and international players, we anticipate higher levels of activity and a total deal volume up 30% to $478 billion (€362 billion) this year.
"Structural changes in the Hungarian economy have been implemented and the results are now starting to be seen. This will undoubtedly encourage investors to look again at the market opportunities here, particularly given the resilience of the Budapest office occupational market and anticipated recovery in consumer spending following the austerity measures. Furthermore, current yields provide a discount of 75 - 100 bps compared with Prague and Warsaw, which we expect to be partially eroded as investors reassess country risk and performance - creating a clear buying window," Charles Taylor, managing director of Cushman & Wakefield Hungary added.
For the first time in a while the prospects for the Hungarian investment market look very optimistic. Over the past 2 years investment volumes in the country have been at an all time low with investors forming a negative perception due to well documented problems with the economy. With the IMF loan being spent prudently and the austerity measures taking effect, the outlook for Hungary's economy looks very strong with GDP growth forecast to increase beyond Poland and Czech over the coming 3-4 years.
Moving onto the real estate fundamentals, Budapest can boast an office take up level consistently higher than it's central European counterparts. This take up has remained at close to record levels throughout the recession with a large ratio of international occupiers moving to the country to take advantage of the cheaper rents, well educated work force and high standard of living. The product on offer is of high quality and the rents are the lowest in the region.
Combining the improving economic situation with the strong real estate fundamentals, the investment market from 2010 onwards is expected to improve drastically. (BBJ Online)