There is a “great wall” of $329 billion of capital available to invest in the global real estate this year, according to DTZ.
The global property services firm will say today when it publishes its The Great Wall of Money report at the MIPIM property conference in Cannes that the amount of capital looking to invest in property assets has increased by 17 per cent since DTZ’s assessment last year.
In particular it said there was $104 billion (£64 billion) targeting the Asia Pacific, a 45 per cent increase from mid-2010 a result of a growing number of funds targeting Asia Pacific, while the EMEA region remained largely unchanged at $114 billion. The report also highlights a further increase in the amount of capital targeting the Americas, which rose 14% to $111billion from US$97bn.
DTZ said that its research showed that third party managed funds accounted for the majority of available capital, with a 56 per cent share of activity. These funds have already raised a total of $131billion of capital compared with $114 billion reported six months ago. Publicly listed companies now represent 20 per cent of raised capital reaching $71 billion, more than double the $33 billion previously available.
The research also showed that Asian and European investors were focused on investing in their home countries or regions, while US-based investors were more likely to invest inter-regionally.
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Nigel Almond, the associate director of forecasting and strategy at DTZ and author of the report, said: “The volume of capital in the three core regions globally is now equally distributed, this is in marked contrast to December 2008 when nearly half of all available capital targeted EMEA.”
The UK is the second most popular single country target, after the US, attracting 10 per cent of available capital, a reduction from previous quarters. Of the capital targeting single countries, the US continues to attract more than half the available capital.
Hans Vrensen, the global head of DTZ Research, said: “The potential impact of the substantial increase in capital targeting Asia Pacific is that we expect to see greater competition for investment opportunities. As a consequence, re-pricing in some of the Asian markets may occur at a faster pace than implied by our fundamental analysis. This scenario has already been witnessed in the UK and is also starting in continental Europe.
“Since our first Great Wall of Money report in December 2009, we have seen strong growth in raised capital. We anticipate a stabilisation in new capital being raised in future, if there is a further continuation of the decline in the attractiveness of property, as indicated by the Fair Value score over the past four quarters.”