Nearly US$281 billion of capital will be available for global real estate investment next year, said DTZ Research. This is 22 percent higher compared to the company’s previous estimate in December last year, as more capital is expected to flow into the real estate markets in Asia-Pacific and the US.
The largest increase in available capital is expected to be focused on the US, a 54-percent increase over the firm’s estimate in December 2009 to US$97 billion.
Another US$71 billion is targeting the Asia-Pacific region, representing a 29 percent increase.
“The current attractiveness of the US is in stark contrast to the situation a year ago,” said Nigel Almond, author of the report and associate director of forecasting and strategy at DTZ. “Most US markets were cold, offering expected returns below risk adjusted required returns. This opportunity remains largely unexploited to date, since transaction volumes in the US have not yet seen the levels witnessed in Europe and Asia-Pacific.”
In the Asia-Pacific, the emerging markets of India and China, as well as Australia’s more mature market are the key targets for single country funds, said David Green-Morgan, who leads DTZ Asia Pacific Research.
“We expect the large increase in available capital targeting Asia-Pacific to have a positive impact on transaction volumes during 2011 with increasing cross border activity,” he added.
The report also underlined the return of listed and private real estate firms to the market.
Publicly listed companies make up 17 percent of available capital, higher than the 4 percent in December 2009, while capital from individuals and private property firms account for 14 percent of available capital, compared to the previous 3 percent.
Meanwhile, third-party managed funds have cut their share from 77 percent to 49 percent.
The data also presented that diversification by both property type and geography is still a priority for investors.