Capital targeting the EMEA region has shrunk 9% in US dollar terms to $130 bn (€122 bn) compared with 2016, while equity targeting the Americas has grown 2% to $173 bn. Asia has seen a marginal increase to $132 bn.

The amount of new capital available for global real estate investment in 2017 stands at $435 bn, slightly down on last year’s peak but the second-highest figure recorded since 2009, according to C&W’s Great Wall of Money report.

The research tracks the amount of newly raised capital, including debt and equity, targeting real estate at a global level. The total global wall of money has fallen by 2% compared with 2016, the first drop to be registered since 2011. However, current levels are the second highest on record, reflecting the ‘extraordinary rise’ in capital targeting the sector during this cycle, C&W said.

Elisabeth Troni, head of EMEA research and insight at Cushman & Wakefield, commented: ‘With the great wall of money targeting real estate at near record levels, investors need to remain focused but agile. We expect 2017 to be marked by ongoing competition to place capital and source attractive opportunities. While core real estate strategies remain highly attractive, demand tends to outstrip supply in many key markets, pushing down yields and challenging investors.’

Target markets

Increasingly, investors are concentrating on single-country strategies rather than deploying capital across multiple borders, C&W found. Single-country investments now represent 61% of available capital, up 55% over the last three years.

C&W expects the US to remain the most targeted investment market in 2017. Although investment activity slowed during 2016, the wall of money targeting the market remains high, with many investors still under-allocated to the sector.  

China is expected to remain the second most targeted country with most capital committed from domestic funds. The UK is the third most attractive market, although relatively less capital is seen targeting the UK as some investors take a ‘wait and see’ approach amid the uncertain backdrop of the Brexit negotiations.

Germany also continues to see strong levels of demand from investors attracted to its strong economic performance and relative ‘safe haven’ status. The country may benefit from some capital being diverted away from the UK. The challenge, especially for core funds, is accessing suitably-priced stock, C&W found.

Nigel Almond, head of EMEA capital markets research, said: ‘One of the most striking trends in commercial real estate is the growth in capital targeting Asia Pacific. For the first time we see more capital targeting Asia than EMEA, putting it second to the Americas, reflecting the maturity and growth of opportunities across the region as well as the prospects for attractive returns.’