Commercial Real Estate Investment

According to a report by Real Capital Analytics the credit crises that have hit the U.S. and UK commercial property investment market could put Asia as the top favourite for investments in commercial real estate. The mobility of capital and rise in cross-border acquisitions will further impact commercial real estate investments around the world.

An overview of the commercial real estate investment market last year revealed that U.S. properties accounted for fully half the global sales, whilst British properties weighed in at 20 percent. Moreover, commercial property investments fell significantly in the second half of the year. With debt markets still frozen and sentiments about commercial real estate investments very uncertain, analysts are rather bearish about those markets. Globalization has however softened the blow on the commercial property investments as investors now tend to spread their risk across markets. Emerging markets were the strongest area for commercial real estate investments last year. China made the top 10 for investment markets for the first time, with a more than 80 per cent growth. With the prospects looking uncertain in the UK and US, it is obvious that as far as commercial real estate investment goes, all eyes will be on Asia.

For commercial property investments within the Asia-Pacific region, the high growth markets are pegged to be China, India and Vietnam for the next five years. Rapid urbanization, a growing middle-class and a less leveraged market are positive indicators for commercial property investments in the region. A good part of commercial real estate investment is expected to be in the form of takeovers or stakes in property and development companies. Sovereign funds and other cash-rich investment pools are also expected to be active in the sector. It is anticipated that China will continue to see the lion's share of activity in commercial property investments. Other hot spots for commercial real estate investments are Eastern Europe and Latin America which were very buoyant last year.