Though Global CRE Investments Declined In Q1, Future Outlook Remains Healthy

Global investments

It's no surprise that the global markets have taken a hit this year, what with the Brexit referendum that sent everything spiraling for a short time last month and China's slowdowns. Despite these shocks, global real estate capital flows appear to be keeping up with the global economy, which has outpaced CRE investments in both real and nominal terms.

In its Property Perspective Global Capital Markets report, released this month, CBRE says real estate investments remain supported by the global economy. 

CBRE
Photo credit: CBRE

Though real estate investments saw a large decline in Q1, CBRE projects the industry has yet to reach it cyclical peak.

When looking at real estate investments, you have to look at overall incoming global investments—which include direct real estate investments as well as equity and bond allotments. Real estate capital averages 10% of total global flows, and CBRE says the correlation between the overall investment and real estate global capital flows is very high. 

American Flag

CRE investments in Q1 took a dive in most of the world's largest real estate markets. Global investments fell to $183B, a 19% drop compared to the year-ago quarter. Still, that's 3% more than Q1 2014 levels, and more than two times the amount in Q1 2010.

CBRE says there was no single factor in the turnaround in investments from 2015, but rather several contributing—including investment activity continuing toward its plateau and the volatile nature of the stock market from September 2015 through this year.

Photo credit: CBRE

Asian countries set a record for global real estate investments in 2015, and in Q1 2016, outbound investments accounted for $62.4B, a 37% year-to-year increase. China in particular has focused on three countries—the US, with $6.1B in investments, Australia with $3.7B and Hong Kong with $2.6B in outbound capital.

Europe has turned its attention to alternative real estate sectors such as student housing and healthcare. The Netherlands' healthcare and student housing investments accounted for 24.6% of its total CRE investments last year, and the UK's student housing sector has attracted roughly $2.2B in investment from the Canadian Pension Plan Investment Board.

CBRE says US real estate fundamentals remain healthy, though global unrest led to a decline. CRE transactions totaled $111B in Q1, down from this time last year, and foreign investments into the country fell from $19.7B to $9.2B within Q1.

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