Colliers’ research anticipates a 50 per cent surge in investment activity in the second half of the year, pointing to a broad-based renewal of confidence in the property market as a result of recent vaccine developments and continued government stimulus.
“Based on our global analysis, which gives us a bird’s-eye view of investors’interests and expected appetite, longer-term tailwinds in the property sector remain intact. With a massive volume of equity raised globally and the need for real assets, investors are eager to deploy pent-up capital and pursue opportunities during the year,” said Tony Horrell, Head of Capital Markets | Global at Colliers International. “We expect to see movement up the risk curve this year, with investors exploring all types of assets from senior care homes to public infrastructure projects.”
The report, which drew nearly 300 respondents including major institutional investors, listed property companies, sovereign wealth funds, private equity funds, family offices and third-party money managers, indicates 98 per cent of investors across all regions aim to expand their portfolios, with approximately 60 per cent looking to expand by more than 10 per cent. Furthermore, 67 per cent of survey respondents in EMEA and 88 per cent of those in the U.S. are planning their next investment as early as the first quarter of 2021.
Additional key takeaways from the Colliers Global Capital Markets 2021 Investor Outlook report include:
• Top-tier city offices remain a primary asset target. Investors with international capital find the scale and liquidity of the office sector in major commercial hubs such as New York, London and Sydney appealing. Having office assets that meet health, sustainability and technical benchmarks is important to investors.
• Logistics and living sectors are thriving. Both sectors were among investors’ top three choices across all regions. Intense demand for these assets will require investors to broaden their geographic focus and build portfolios through joint venture platforms and local partnerships.
• Opportunities to repurpose discounted retail and hospitality assets. Investors are expecting to see pricing discounts of over 20 per cent in these sectors. They represent a rare opportunity to acquire core and distressed assets for ambitious repurposing initiatives.
• Alternatives, platforms and partnerships are playing a bigger part. Rising demand for alternative assets such as data centres, senior living and life science assets reflects broader structural shifts amplified by the pandemic.
According to the general consensus of Colliers’ Investor Outlook report, the Hungarian commercial real estate market is also anticipated to benefit from increased activity in 2021. Having witnessed a sharp 45% drop in transactional volumes in the previous year, 2021 will see improved activity on the market coming close to volumes as high as in 2019. The previous year stared off as a potentially record year for investment turnover in Hungary. The COVID-19 pandemic broke the momentum in late March having increased the risk profile of property invesments and pricings.
“As evidenced in the better half of 2020, investors are putting more focus on sustainability and efficiency issues when it comes to underwriting deals. Some part of the older and ineffective office stock, combined with slower leasing of the new pipeline estimated at 160 000 sq m will push the vacancy level considerably above the double digit mark. The importance of key locations and stability of underlying cash flow is ever-increasing. True winner of the pandemic is the warehousing and logistics sector in large with strong growth in values on the back of excess demand. The retail sector’s performance is rather divided and unbalanced. Whilst the typical shopping centres and high street retail have been struggling; supermarkets, strip malls and other specialised stores are delivering solid results, hence commanding strong liquidity.” – added Bence Vécsey, Director, Head of Capital Markets at Colliers International Hungary.