important , in terms of the way that they influence the macro environment , can provide investors opportunities in the short term as well . We saw property stocks drop significantly after Brexit and in the United States around the elections .”
Following a tumultuous 2016 driven by the unexpected outcomes of the Brexit referendum and the U . S . Presidential elections , global real estate deal volumes for the year fell eight percent in the Americas and nine percent in Europe . Asia Pacific was the only region to see an increase in transactional infrastructure spending and ‘ make America great ’ may create inflationary pressure , which will drive up interest rates at a much faster rate . “ That would be damaging because real estate yields have compressed to historically low levels and they have only just started to move out ,” says Green-Morgan . “ A rising interest rate environment without good strong economic growth is never a good scenario and would leave some real estate investors quite exposed .”
Among potential buyers , Chinese capital will continue to play a
“ Concentrate on income in 2017 because trying to generate significant capital growth is going to be difficult given current pricing ”
“ Development always involves higher risk and you see the lenders continuing to shy away from financing development ,” says Green-Morgan . “ If the economy does expand as predicted this year , we will definitely run into a situation where there will be a shortage of space in a number of locations around the world and rental growth will increase quite rapidly in that scenario .”
While markets in 2017 will continue to be influenced by political risk , with elections in France and Germany in the spotlight , Green-Morgan does not view such events necessarily as negative . “ These political events while activity , rising by five percent , bringing the full-year global volume to US $ 661 billion , a six percent decline from 2015 . JLL is expecting transaction volumes in 2017 to reach US $ 660- $ 700 billion .
The United States offers upside potential
Despite concerns about the Trump presidency , international interest in U . S . real estate remained unabated , according to JLL . “ They has been a lot of rhetoric about ‘ America First ’ and trade wars but certainly in discussions we have had , people are just as keen , if not more keen now , because they think that if Trump really turns some of these policies into reality , then the United States will see economic growth ,” says Green-Morgan . “ This year , the United States is possibly the country with greatest upside potential , compared with other developed economies . While Trump ’ s foreign policies have caused concerns , his “ America First ” inaugural address resonated with voters , and his plan to spend US $ 1 trillion dollars updating and improving aging U . S . infrastructure is expected to benefit the domestic economy .
However , a follow-through of his election promise to boost dominant role . “ The Chinese are now , alongside the Germans and the Americans , the largest movers of capital globally ,” says Green-Morgan .
Last year , China invested US $ 33 billion in global real estate , up more than 50 percent from 2015 levels . Significant transactions include the purchase of Strategic Hotels and Resorts by Anbang Insurance for over US $ 6 billion ; China Life Insurance ’ s portfolio purchase of the Starwood Capital Group and an office tower in Manhattan ; the HNA Group completing its acquisition of Carlson Hotels and a 25 percent stake in Hilton Worldwide .
In Asia , Green-Morgan also expects increased activity from Japanese buyers . Japan ’ s GPIF , the world ’ s largest pension fund , has said that it plans to increase investment in private equity and infrastructure in 2017 and start investing in real estate to boost returns . In Europe , French institutional capital has been active alongside Middle Eastern buyers . “ We should continue to see the trend of more money coming into real estate with all types of companies , particularly insurance firms and sovereign wealth funds , wanting to raise their allocations ,” says Green-Morgan .
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