Global CRE Capital Flows Way Down, But Poised for Upswing: CBRE
By Andrew Coen September 1, 2023 1:31 pm
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Elevated interest rates are undoubtedly weighing heavily on commercial real estate investment across the globe, but a recovery could be around the corner.
Cross-regional capital flows between North America, Europe and Asia-Pacific were down 52 percent in the first half of 2023 with $30.5 billion in total transaction volume, according to a new CBRE (CBRE) report released Friday. While rising interest rates have slowed investor demand in the CRE market, worldwide interest is expected to pick up again early next year, the CBRE research predicts.
“Global investors likely will remain cautious for the rest of this year due to high interest rates and economic uncertainty,” Richard Barkham, global chief economist for CBRE, said in a statement. “Nevertheless, it appears that inflation has peaked globally and central banks are either at or near the end of their rate-hiking cycles. Therefore, we expect the global investment market to begin recovering in the first half of 2024.”
In addition to higher interest rates, the big dip from global CRE investors in 2023 has also been triggered by “softer real estate fundamentals” coupled with a mismatch in pricing expectations between buyers and sellers, according to CBRE.
Cross-regional investment in North America increased by 5 percent compared to the first half of 2022 largely aided by two large acquisitions by Asian investors, CBRE noted. This included Singapore-based GIC’s contribution toward a $14 billion buyout of real estate investment trust Store Capital in partnership with Chicago-based Oak Street Real Estate Capital. Unnamed Japanese investors also made a large acquisition involving the New York City office sector, according to CBRE.
By property sector, industrial and logistics were the most sought-after assets globally, accounting for 37 percent of all global cross-regional investment in the first half of 2023. This marked the highest half-year share of any asset type on record, CBRE said.
Andrew Coen can be reached at acoen@commercialobserver.com
