Record level of capital investment in commercial real estate

• The total value of global capital for investment in commercial real estate reached the record level USD 429bn at the end of 2014
• The fastest pace of capital growth was reported in the Americas (12%)
• Funds targeting properties in single country dominate the market

According to the DTZ’s Great Wall of Money report, total capital invested in commercial real estate reached a new global record of USD 429bn at the end of 2014. This growth was supported by funds stemming from equity raising by companies. However, the growth rate of new measures fell to 5% at the end of December, from 15% in the middle of 2014.

The biggest increase in capital available has been reported in both Americas – growth by 12% to USD 166bn, whereas in Asia and Pacific capital grew by 4% to USD 122bn.
In EMEA, there was a 1% decrease in capital to USD 141bn, which was driven by a strengthening of the dollar against euro over last months.

The majority of capital raised was generated by funds targeting multiple property types. At the end of 2014, over 70% of funds invested in more than one sector, although the share of this group of investors shrunk by close to 10% compared with 2013. Funds targeting a specific asset class rose by 29% in the corresponding period.

In the case of funds dedicated to a specific type of property, the largest share in the portfolio was occupied by residential space (23%), industrial (19%) and retail (18%).

At the end of 2014, single country funds possessed the majority of available capital (59%), whereas 41% of capital accounted for funds seeking investment opportunities in multiple markets. This reverses the downward trend in these investors stake observed since 2012.

The largest share of new capital available for commercial real estate investments accounted for the United States (USD 145bn), the United Kingdom and China (each close to USD 47bn), Japan (USD 29bn), Germany (USD 24bn) and France (USD 23bn).

The increase in new capital reflects a continued appeal of commercial real estate as compared to treasury bonds. With improving liquidity on the markets, we expect that investors’ demand will contribute to higher volume of investment transactions in the next 12 months, said Craig Maguire, Head of Capital Markets, DTZ.