Funds News

Investors to boost property purchases on U.S. growth- CBRE survey

NEW YORK, March 7 (Reuters) - A majority of commercial real estate investors plan to be net buyers this year, the highest level since 2014, spurred by prospects of increased U.S. economic growth and less regulation, a survey of investor intentions showed on Tuesday.

The percentage of investors who intend to buy property in 2017 rose to 67 percent from 65 percent last year and 60 percent two years ago, according to a survey by CBRE Group Inc, the world’s largest commercial real estate services firm.

The survey of institutional investors, private property and private equity firms, among other investors in commercial real estate, shows 83 percent plan to maintain or increase their purchases this year.

But investors plan to reduce risk with more conservative strategies. The survey showed the industrial sector, such as warehouses and data centers, as the most attractive asset class in 2017, garnering 38 percent of investor intentions.

Fifty-four percent of institutional investors, composed of sovereign wealth, insurance and pension funds, plan on investing more than $1 billion in commercial real estate, CBRE said.

U.S. gateway cities drew the most interest as investment destinations, with Los Angeles maintaining the No. 1 preference from last year, followed by Dallas-Fort Worth and New York City.

Still, investors remain concerned about asset valuations, while they see global economic shocks and rising rates as the greatest threats to property markets, CBRE said.

The mostly positive outlook is corroborated by a record $144 billion that investors have allocated in 2017 for North American property, CBRE said, citing London-based Preqin, a data and analytics firm for alternative assets.

Positive growth expectations, when compared with subdued or little to no growth in the rest of the developed world, indicate continued strong capital inflows to the United States this year, CBRE said.

In a separate Preqin survey of more than 180 real estate fund managers that echoed CBRE’s findings, two-thirds of investors intend to deploy more capital in 2017 compared with last year, and almost half plan to invest significantly more.

Fund managers have record amounts of capital at their disposal, which has pushed asset prices higher amid increasing competition, Preqin said last week. Despite growing concerns about valuations, asset availability and record levels of capital, most firms say they can find value in the current market, Preqin said.

The CBRE Americas Investor Intentions Survey 2017 of 963 respondents was conducted between Jan. 6 and Feb. 6. (Reporting by Herbert Lash; Editing by Daniel Bases and Matthew Lewis)