colliers global investment sentiment survey q1 2010

8/9/2019 Colliers Global Investment Sentiment Survey Q1 2010

1/20

GLOBAL INVESTOR

SENTIMENT SURVEYQu 1 2010


2/20

Global Real estateInvestmentMarc 2010

Global real estate capital fows plummeted in 2009, alling 46% relative to

2008 and 79% below 2007 levels. Real estate transactions rom all regions

o the world totaled just US$141 billion in 2009, an amount just below what

the Americas recorded in Q1 2007 alone. Ater such a steep all-o and in

an eort to better understand the mindset o real estate investors, Colliers

International undertook the task o surveying real estate proessionals rom

all corners o the globe. The result is a snapshot o the current sentiment

and outlook or the global real estate marketplace, providing valuable insight

into how property markets are expected to perorm over the coming months

and years. Much uncertainty still exists, but capital fows are showing signs

o coming o the bottom and current investor sentiment indicates we are on

the verge o the next up-cycle or property markets around the world.

Jamie Horne

Executive Sponsor

Colliers International

Global Investment Services Team (GIST)

bu h Suy

The 2010 Global Investor Sentiment Survey was launched on February

15th and closed on March 1st 2010

The survey contained a wide variety o questions generated by Colliers

International Research in collaboration with senior Colliers proessionalsrom the Colliers International Global Investment Services Team (GIST)

Major Institutional and Private investors representing a broad cross-

section o property investors across the globe were invited to complete

the survey; There were a total o 244 respondents, whose combined

investment portolio exceeds $300 billion

The global survey ollows the success o our Australian investor survey

and provides some interesting insight on current investor sentiment

The primary purpose o the survey was to better understand global

investor sentiment in the current marketplace; including investors outlook

on the coming 12 months


3/20

KEY FINDINGS Most investors (almost two thirds) are looking to expand their real estate

portolios, leaving just under a third either holding steady or rebalancing

their existing portolios

The vast majority (80%) have little or no appetite or cross-border

investment (outside their domestic market)

Investors - such as those in the USA, Australia, Canada, Germany and the

UK - are predominantly interested in their respective domestic markets

only. However, they also singled out a number o emerging countries -

such as Poland, Ukraine, Vietnam, Brazil and India - or possible uture

investment.

Globally, rents are anticipated to hit bottom this year. The most requent

response was Q4 2010 or the Oce market, ollowed by Q2 and Q32010 or Industrial and Q3 or Q4 2010 or Retail

Considerable divergence exists when asked when a more normal* market

will emerge, but most investors listed either late 2010 or early 2011

Investors in Asia and the Pacic (Australia and New Zealand) expect

the market to return to normal by Q4 2010, ollowed by those in Canada,

Latin America, Eastern Europe and Western Europe by Q1 2011, and

those in the USA who said in Q2 2011

While a clear majority o investors were looking to expand their

real estate portolios, most expressed high degrees o caution and

signicantly more rigorous due diligence

3

Respondents also overwhelmingly

reported a shit toward high-

quality, well-perorming assetsand a simultaneous shit out o

non-income producing real estate

or anything with a high risk

prole

Many investors viewed the events

o the past two years as a good

reminder that commercial real

estate is highly cyclical and timing

(both in and out o the market) is

critical to making prots

* Most determined normal yields(capitalization rates) as 7.0 - 7.5% or oice,8.0-8.5% or industrial and 6.5%-7.5% orretail product; considerable variation existsaround these price ranges with some regions

already back to these levels and beginning totrack back down.

GLOBAL INVESTORSENTIMENT SURVEY

review of investor sentiment


4/204

4% oFResPonDents aReooKInG to eXPanD

tHeIR PoRtFolIos

DURInG tHe neXt 12montHs

PROPERTYINVESTMENT STRATEGYThe events o the past two years had a measurable

eect on investors, with no region spared. Butwhile many investors are dealing with portolios

that are under-perorming relative to expectations,

the majority (64%) o survey respondents

indicated that they are looking to add to their

existing portolios over the coming 12 months.

STRATEGY:HOW WOULD YOU DESCRIBE YOUR PROPERTYINVESTMENT STRATEGY FOR THE NET 12 MONTHS?

Contract RebalanceExpandRemain thesame

0

10

20

30

40

50

60

70

80

5%

11%

64%

20%

Percentage


5/205

BUYINGPROPERTY

BUYING PROPERTY:DURING THE NET 12 MONTHS, DO YOU INTEND TOBUY PROPERTY OFF-SHORE (OVERSEAS)?

0

10

20

30

40

50

60

Yes No o-shore portolioNo

20% 20%

60%

Per

centage

Despite a airly negative global economic backdrop, survey respondents elt

that real estate prices today represent good value, and many are willing to

look past what could be a dicult period in terms o rents and vacancies.

Indeed, respondents expect industrial rents to bottom out as soon as mid-year 2010, retail by the end o the third quarter and oce by year-end. This

almost certainly goes a long way to explain why survey respondents expect

the investment market to be back to normal by either 2010 or early 2011. In

the meantime, however, 60% o investors indicated a real reluctance to invest

beyond their own borders, refecting a more cautious stance taken by many.

Another 20% do not even have an o-shore portolio, leaving 80% out o

cross-border investing, at least or the time being.

The investment mantra rom all corners o the globe appears to be stick to

what you know and, unless the potential upside is signicant, stay close to

home and be content with more modest returns. This approach was born

out o a desire to invest in more mature economies, orgoing the investment

potential in less mature markets. Until there is a positive shit in the global

market, most investment will likely be contained to domestic transactions in

the G7 economies and English speaking countries. However, as investors

tolerance or risk increases, respondents listed a number o countries that

hold appeal or uture investment, including Poland, Ukraine, Brazil, Vietnam

and India.

This tendency to invest domestically is almost certainly a short-term

phenomenon. The return o cross-border investing is sure to be seen onceinvestors have a greater comort level concerning the global economy and the

global nancial system.

80% oF InvestoRsInDICateD eItHeR a

Real RelUCtanCe toInvest beYonD tHeIR

oWn boRDeRs oR

Do not even Havea CRoss-boRDeR

PoRtFolIo


6/206

TH

EGLOBALPROP

ERTYCLOCK D

ownSwin

gupS

wi

ng

1211

10

9

8

7

6

5

4

3

2

1

21%

2%

19%

14% 20%

12%

pk

ugh

MARKET SENTIMENT:THINKING ABOUT THE GLOBAL PROPERTY CLOCK,WHAT STAGE OF THE PROPERTY CYCLE DO YOUBELIEVE YOUR REGION TO BE IN CURRENTLY?

Most investors eel their that domestic market is nearing the

bottom, with 41% indicating that the market is between 5:00

and 6:00 on the Global Property Clock *

19% believe that their domestic market has already moved o

the bottom and is sitting at 8:00 on the Global Property Clock *

CURRent CYCle


7/20

DownSwin

gupS

wi

ng

7

MARKET SENTIMENT:WHERE DO YOU ANTICIPATE THE GLOBALPROPERTY CYCLE IN YOUR REGION WILL BE IN12 MONTHS?

By comparison, in 12 months, 51% (a slight majority) believe

that their domestic market will be moving into an upswing

(between 7:00 and 8:00) on the Global Property Clock *

* Majority results based on median o 244 responses

CYCle In 12 montHs

16%

14%

30% 3%

21% 4%

1211

10

9

8

7

6

5

4

3

2

1

pk

ugh

TH

EGLOBALPROP

ERTYCLOCK


8/20

REGIONAL PROPERTY CLOCKCURRENT CYCLE CYCLE IN 12 MONTHS

8

6:00 8:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

ASIA D

OWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property

markets are

at or near the

bottom and

projected to

be in recovery

mode in one

year.

7:00 8:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

PACIF

IC

AUS/

NZ

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property

markets arealready through

the worst

and will be in

recovery mode

in one year.

8:30

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

LATIN

AM

ERICA

8:30

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property markets

are already in

recovery mode

and will still be

characterized

by a general

upswing in

leasing activity

one year

rom now.


9/20

CURRENT CYCLE CYCLE IN 12 MONTHS

9

6:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

USA

7:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property

markets are

at or near the

bottom and are

expected to be

showing signs

o recovery one

year rom now.

5:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

CANADA

7:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property

marketsnearing the

bottom and are

expected to be

showing signs

o recovery one

year rom now.

5:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

WESTERN

EUROPE

7:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property

markets

nearing the

bottom and are

expected to be

showing signs

o recovery one

year rom now.


10/2010

The likely reason most investors are planning to expand their real estate

portolios in the coming year is that the majority believe that their respective

domestic real estate markets are at or near the bottom. This was refected

by two thirds o respondents believing that their domestic markets are

between 5:00 and 6:00 on the Global Property Clock, with 12:00 being the

top o the market and 6:00 being the bottom. Furthermore, a signicant

percentage believe that their respective markets will be at either 7:00 or

8:00 in 12 months time. This point on the Global Property Clock indicates agrowing market, characterized by a general upswing in demand or leasing

and the beginning o rising rents.

10

CURRENT CYCLE CYCLE IN 12 MONTHS

REGIONAL PROPERTY CLOCK

5:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

EASTERN

EUROPE

5:00

DOWNSWIN

G

UPSW

ING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property

markets

nearing the

bottom and

are expected

still be on the

downward leg

o the cycle one

year rom now.

4:30 7:00

DOW

NSWIN

G

UPS

WING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGHMIDDL

EEAST

DOW

NSWIN

G

UPS

WING

1211

10

9

8

76

5

4

3

2

1

PEAK

TROUGH

Property

markets still on

the downward

leg but areexpected to be

showing signs

o recovery one

year rom now.


11/2011

CONCERNS AND FACTORSAFFECTING INVESTMENT

Availability o debt and equity capital

Availability o product (property to purchase)

Reasonable pricing

Economic conditions and associated leasing /

letting risk

The ability to trade up to higher quality real estate

Risk avoidance and deleveraging where possible

The ability to seek out broken condo deals

Opportunities that may present themselves

because o competitors misortunes

Investors worldwide all expressed a real concern about the availability o

capital. Real property is a capital-intensive industry, so it is not surprisingthat one o the top concerns or investors is an adequate supply o debt

nancing at a reasonable price. Interestingly, normal price in initial yield

or capitalization rate terms varied by property type, but normal or oce

was elt to be 7.0%-7.5%, with 8.0%-8.5% or industrial and 6.5%-7.5%

or retail. By these metrics, many regions have already risen to these

normal levels and are now back on the way down, with the exception

o the US, where capitalization rates have risen higher. The US cap rates

have almost certainly escalated because o the abundance o distressed

property in the marketplace.

O equal concern was the lack o or sale high-perorming core property,

with many survey participants complaining that there was almost nothing

to buy, certainly not at a reasonable price. Survey respondents indicated

that new lending underwriting standards were not consistent with asking

prices and was creating gridlock in the transactional sales market. Looking

orward, investors will have to provide more equity than even today and

accept lower returns, while sellers will have to drop their prices to refect a

weakened occupier market and more stringent nancing conditions.

Consistent with a heightened sense o risk, investors also expressed an

overwhelming desire to trade up to higher quality real estate. Whether itis a prime location, a major metropolitan area, the best physical structure

or a tenant role comprising multinational corporations, investors showed a

strong desire to move up the quality

ladder. Parallel with this fight toquality, investors have little appetite

or risk, whether it be vacancy,

renancing, construction or in the

case o global investing, currency or

political instability.

Highlighting the competitive nature

o property investing, one o the key

themes running through the survey

was that investors perceive anincreasing ability to either acquire

distressed assets - properties that

just a short time ago were beyond

their investment reach - or else

can now put together a realistic

distressed asset plan, an investment

strategy they could not previously

consider. Numerous bankruptcies,

distressed property and the unwinding

o joint venture partnerships are

providing liquid investors theopportunity to expand their portolios

at their competitors expense.

67% oF InvestoRsFeel tHeIR maRKet IsneaRInG tHe bottom


12/2012

ACCESS TO DEBT

40% o survey respondents think access to debtis easier now than 12 months ago, but this is only

marginally more (39%) than those who thought

that debt is now more dicult to source

The majority (52%) are nding that the cost o

debt is higher today than 12 months ago

Looking orward 12 months, 89% believe access

to debt will be easier to nd or at least the sameas today, with only 11% thinking that debt will be

more dicult to access

Interestingly, while most think availability o debt

will improve, 52% think that the cost will have

increased relative to now

DEBTIN THEREGIONS Investors in Asia, Canada, Latin

America and Western Europe

indicated an improvement in

access to debt over the last year,

while those in the US and thePacic registered no signicant

change. Meanwhile, investors

in the Middle East and Eastern

Europe saw less debt nancing

12 months rom now, investors

in all regions are expecting better

access to debt nancing with the

exception o the Middle East

In terms o cost, investors in

Western Europe, the Middle East,Eastern Europe, the USA and the

Pacic all indicated that the cost

o debt had increased over the

past 12 months, with Asia and

Latin America showing no change

and Canada a slight decrease

A year rom now, investors in

the US, Canada, Western Europe,

the Middle East and the Pacic

all expect borrowing costs to beup rom where they are today.

Investors in Asia do not anticipate

any signicant change, while

those in Eastern Europe and

Latin America expect borrowing

costs to be lower

Cheap and ample debt is the elixir o a robust and growing real estatemarket; the 20022007 period demonstrated that perectly. Beginning

mid-2007 with the onset o the global credit crisis, access to debt

nancing was greatly reduced, and with only just a ew exceptions,

access to debt is still a challenge or many investors and was one o

the primary concerns expressed by survey respondents.

Somewhat surprising, however, was the near even split between those

that think access to debt is more dicult today than 12 months ago and

those that think it is easier. The discrepancy is most likely a unction

o the investors respective regions and the varying degrees o capital

market strength. A year rom now, however, the near consensus viewis that debt will be either easier to nd, or, at a minimum, the same as

now. A slight majority also think the cost o debt will be up relative to

today, most likely refecting the view that many Central Banks will raise

interest rates over the next 12 months, and long terms rates - and by

deault, mortgage rates will also likely see a similar increase.

12


13/2013

FINANCING:OVERALL, HOW HAS THE COST OF DEBT CAPITAL INYOUR REGION CHANGED IN THE PAST 6 - 12 MONTHS?

0

10

20

30

40

50

60

Become lessexpensive

No changeBecome moreexpensive

32%

16%

52%

Pe

rcentage

Cost o debt

FINANCING:

OVERALL, HOW DO YOU THINK THE COST OF DEBTCAPITAL IN YOUR REGION WILL CHANGE IN THE NET6 - 12 MONTHS?

Become lessexpensive

No changeBecome moreexpensive

22%

37%

41%

Percentage

Cost o debt

0

10

20

30

40

50


14/2014

SUSTAINABLEBUILDINGS

A slim majority (51%) appear willing to pay a

premium to purchase a sustainable building

I an investor was prepared to pay a premium,

most would lower the yield/capitalization rate by

25 basis points, although 10 basis points was the

most requent response

When asked why a premium might be worth

paying or a sustainable property, the most

requent responses included lower uture capital

expenditures; higher value retention; social

responsibility; the ability to attract large corporate

and government tenants; ree marketing; a

competitive edge when trying to attract tenants;and uture proong with respect to possible

carbon taxes

Worldwide, real estate investors

have become considerably more

attuned to the evolution o greenbuilding practices and the move

towards more sustainable buildings.

The perception is that green

buildings are more expensive to

construct so the question is will

investors pay a premium? When

asked this question, only a very

small majority indicated that they

would pay a premium. Indeed,

almost no respondents would paymore than 25 basis points and

the most requent response was

just 10 basis points. This was

despite many respondents listing

lower uture capital expenditures

as one o the key benets o a

green building. Other benets

included the ability to attract

socially conscious corporate and

government tenants and uture

proong with respect to possiblecarbon emission taxes.

51% WoUlD PaY aPRemIUm to PURCHasea sUstaInablebUIlDInG


15/20

loWeR CaPItaleXPenDItURe &

HIGHeR valUeRetentIon WeRe

JUst tWo oF tHeReasons WHY

InvestoRs WoUlDPaY a PRemIUm FoR

a sUstaInablePRoPeRtY

15

SUSTAINABILITY:WHAT PREMIUM (LOWER CAP RATE / YIELD) WOULDYOU PAY FOR A SUSTAINABLE BUILDING?(ANSWERS IN BASIS POINTS)

0

5

10

15

20

25

30

35

Percentage

Premium

31%

14%

17%

11%10%

12%

2%

1% 1%

Level

-5

-10

-15-20

-25

-30

-35

-40

SUSTAINABILITY:WOULD YOU PAY A PREMIUM FOR A SUSTAINABLEBUILDING?

Yes

No

51% 49%


16/2016

This survey was produced in collaboration with senior proessionals rom the Colliers International GlobalInvestment Services Team (GIST). The group provides unparalleled knowledge and expertise in investment

sales services to a broad range o institutional and private clients around the world.

Annually, GIST members negotiate billions o dollars in investment sales transactions. They have

successully assisted clients in maximising the value o their real estate assets in oce, retail, multi-amily,

hotel, industrial and logistic transactions.

As a group, the majority o respondents expressed a relatively high

degree o optimism in the overall global economy and state o the real

estate market, refected by a wish to expand their property portolios.

But many also have serious concerns, mostly tied to the underlying

economy, particularly post-government stimuli. Most respondents also

recognized that nancing is central to any type o return to a more

normal market.

With property values down by as much as 40% worldwide, as is the case in the United States, renancing is

going to be very dicult, at least in the near uture, particularly in the absence o a public debt market (CMBS;

Commercial Mortgage Backed Securities). While more traditional lenders are slowly returning to the market,

depressed property values and stricter underwriting standards are going to be a serious limiting actor.

Another theme running through the survey results was a seismic shit toward high-quality, well-

perorming assets and a simultaneous shit out o non-income producing real estate or anything with

a high risk prole. The move back towards income and less emphasis on capital appreciation wasbest captured by the sentiment rom one survey respondent who stated, capital gains are just a

bonus; we buy property or income.

Lastly, many investors expressed the view that real estate cycles are now shorter and more severe compared

to historical norms, which serves as a warning to others that, going orward, market participants will need to

be more nimble, and access to current and insightul analysis will be more important than ever.

CONCLUSION


17/2017


18/2018

Colliers International all rights reserved. No part o this work may be reproduced or copied in any orm or by any means (graphic, electronic ormechanical, including photocopying, recording, taping, or inormation retrieval systems) without the written permission o Colliers International.

Colliers International does not give any warranty in relation to the accuracy o the inormation contained in this report. I you intend to rely upon theinormation contained herein, you must take note that the inormation, igures and projections have been provided by various sources and have not beenveriied by us. We have no belie one way or the other in relation to the accuracy o such inormation, igures and projections.

Colliers International will not be liable or any loss or damage resulting rom any statement, igure, calculation or any other inormation that you relyupon that is contained in the material. 2010


19/20

GLOBAL INVESTMENT SERVICESEECUTIVE TEAM

ASIA PACIFICauri

John MarascoManaging Director -

Investment Sales

DDI +613 9612 8830

[email protected]

Hg Kg

Antonio Wu

Regional Director - Asia

Investment Sales

DDI +852 2822 [email protected]

Jp

Brett Jensen

Account Manager West Japan

DDI +816 6232 0790

[email protected]

MIDDLE EASTUae, Qr, sudi ari,

bhri, Kuwi & oJohn Davis

Chie Executive Ocer

DDI +971 4 423 4910

[email protected]

Gr quiri:

+44 207 935 4499

EUROPEGry

Thomas DnzelChairman - EMEA Investment

Team

DDI +49 89 624294-27

[email protected]

nhrd

Jos Schssel

Chairman EMEA Investment

Team

DDI +31 20 675 [email protected]

Uid Kigd

Andr James

Head o Investment Marketplace

DDI +44 20 7344 6707

[email protected]

THE AMERICASCd

Milton LambSenior Vice President -

Investment

DDI +1 416 607 4347

[email protected]

nrh aric

Lisa Campoli

Executive Vice President -

Boston

DDI +1 617 330 [email protected]

J murphy

Executive Managing Director

New York

DDI +1 212 716 3730

[email protected]

li aric

Ricardo Betancourt

President International

DDI +55 11 3323 0005

[email protected]

COLLIERS

INTERNATIONAL GLOBALRESEARCH TEAM:

G ayi /th aric

Ross Moore

[email protected]

DDI + 1 617 896 7611

ai

Simon Lo

[email protected] +852 2822 0511

Pcifc

Felice Spark

[email protected]

DDI +61 2 9257 0289

emea

Damian Harrington

[email protected]

DDI + 420 226 537 624

glbl SM SS

xu M

S pF

Australia

John MarascoManaging Director -

Investment Sales

DDI +613 9612 8830

[email protected]

Hong Kong

Antonio Wu

Regional Director - Asia

Investment Sales

DDI +852 2822 0733

[email protected]

Japan

Brett Jensen

Account Manager West Japan

DDI +816 6232 0790

[email protected]

MDDl S

UAE, Qatar, Saudi Arabia,Bahrain, Kuwait & Oman

John Davis

Chie Executive Ocer

DDI +971 4 423 4910

[email protected]

General enquiries:

+44 207 935 4499

up

Germany

Thomas DnzelChairman - EMEA Investment

Team

DDI +49 89 624294-27

[email protected]

Netherlands

Jos Schssel

Chairman EMEA Investment

Team

DDI +31 20 675 7500

[email protected]

United Kingdom

Andr James

Head o Investment Marketplace

DDI +44 20 7344 6707

[email protected]

h MS

CanadaMilton Lamb

Senior Vice President -

Investment

DDI +1 416 607 4347

[email protected]

North America

Lisa Campoli

Executive Vice President -

Boston

DDI +1 617 330 8081

[email protected]

James Murphy

Executive Managing Director

New York

DDI +1 212 716 3730

[email protected]

Latin America

Ricardo BetancourtPresident International

DDI +55 11 3323 0005

[email protected]

llS

l

glbl Sh

M:

Global Analysis /

The Americas

Ross Moore

[email protected]

DDI + 1 617 896 7611

Asia

Simon Lo

[email protected]

DDI +852 2822 0511

Pacifc

Felice Spark

[email protected]

DDI +61 2 9257 0289

EMEA

Damian Harrington

damian.harrington@

colliers.com

DDI + 420 226 537 624

19


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colliers global investment sentiment survey q1 2010

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