Real Estate Investor Magazine South Africa Real Estate Investor Magazine - April 2017 | Página 37

Top Investment Trends for 2017
Commercial real estate remains an important
asset class for private investors, with 27% of global
transaction volumes attributed to private buyers in
2016. The 2017 Knight Frank Attitudes Survey data
shows that a full quarter of private client wealth is held
in real estate investments (excluding their primary
residence and second homes). This varies significantly
from region to region, with Asian investors holding
the highest proportion (29%) and North American
investors the lowest (15%).
According to the Knight Frank Investment Trends
Survey, the majority of investment into commercial
real estate was primarily driven by the want of
diversification, with real estate being used in portfolios
to provide variation from both domestic economy and
across asset classes.
The survey identified office property as the most
popular sector in investors’ portfolios at 54%, a finding
borne out by both long-term global transactions data
and the results of the Attitudes Survey.
Real estate continues to be a safe-haven for
investors
Survey sentiment strongly shows that real estate
continued to provide a safe-haven for capital and
a stable and secure income return in a low growth
environment. A sentiment reflected in the survey’s
interview with Ian Bremmer, and the significance of
safety of capital over size of returns. Despite an element
of caution expressed from some parts, investors have
a healthy appetite for further commercial real estate
investment in 2017. Most survey respondents talked
in terms of large double-digit percentage target
increases in the level of assets under management.
Investors prefer the UK as an investment
target
The survey shows the majority of investors still
feel under-invested in property and are looking to
rebalance overall portfolios. Typically, respondents
were looking to secure lot sizes from £20 million to
£50 million, although a number talked of scaling up
to over £100 million. Respondents’ preferred locations
varied considerably depending on their domicile, with
Australia, Africa and the US all cited as investment
targets for 2017. The majority, however, continue to
look to Europe for their allocations, the UK being the
most popular individual country. The reasons cited for
this include the scale of the market, relative liquidity
and the depth of opportunities available.
Logistics provides the biggest opportunity
for investors
The findings also show that logistics real estate is
becoming increasingly attractive with 15% already
invested and 22% looking to invest. Retail property is
being affected by a huge shift in consumer behaviour;
specifically, urban logistics, as part of the new
ecommerce supply chain is seeing the biggest step-
change in how property is used and where it is located.
It is in these urban, local facilities that are seeing
the greatest potential for private investors seeking
secure long-term returns, and looking to tap into the
growth opportunities created by the rise of cities and
increasing urbanisation.
The results of this first Investment Trends survey
clearly show that family offices’ relationship with
commercial property will only strengthen further
over 2017. The asset class remains an important
diversifier from their domestic economy and a “real”
asset capable of providing both a store of wealth and a
stable income component.
SOUTH AFRICA:
AN ACTIVE MARKET PREDICTED FOR 2017
The commercial real estate industry was full of indecision for
a large part of 2016. Global events like Brexit caused their
local subsidiaries to freeze on decisions regarding new leases,
acquisitions and disposals until further notice of the impact of
Brexit.
South Africa had its local municipal elections in 2016, with
many clients feeling uncertain of the outcome. We saw the Rand
fluctuating significantly because of these two major events,
which, in turn created a freeze across the leasing industry, as
well as for owner occupiers looking to acquire premises for
their business. These clients found it preferable to extend their
current leases to ‘ride out’ the rocky market.
Investors were, and still are, very active in the market and,
for the most part, the events of 2016 didn’t deter them from
buying income generating properties. We did see a lot of
coastal investors coming inland to acquire properties at more
favourable yields - often outbidding their local counterparts.
Generally, 2016 was a year of large volumes of smaller lease
and sale transactions with smaller local clients, whereas the
listed companies and national clients preferred to lay low during
2016. As a result, 2017 has gotten off to a great start and we are
excited about the opportunities that lie ahead of us this year.
By Markus Dickerson
RESOURCES
Knight Frank
www.reimag.co.za
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