Mar 08, 2012 | Comments 0
Asia Pacific continues to lead the way for commercial real estate investment with 33 per cent of investment capital expected to come from outside the region, according to DTZ Research.
Titled ‘The Great Wall of Money’, DTZ’s latest data shows increased levels of cross border investment into Asia Pacific as well as Europe, Middle East and Africa (EMEA) during 2012.
While Asia Pacific continues to be a bright spot for investment, capital available for investment this year has declined 6 per cent to US$298 billion from an estimated US$316 billion as of mid-2011.
It also represents a 9 per cent fall on the peak recorded a year ago.
For the first time, there was a fall in new capital in the America, Asia Pacific and EMEA.
DTZ said the reduction in the amount of capital estimated to be available for investment in 2012 reflects the current environment of less available and more expensive debt
“The amount of equity we estimate available for investment actually grew 4 per cent to US$139 billion. But, this was more than offset by a 12 per cent reduction in debt available to US$160 billion. Therefore we are not surprised to see funds reduce their target gearing as they seek to place more equity into deals,” said Nigel Almond, associate director of forecasting & strategy at DTZ and author of the report.
The average loan-to-value (LTV) ratio was down from 58 per cent to 54 per cent.
According to DTZ, existing funds have started to put capital to work reducing the remaining raised capital for deployment in 2012 from US$285 billion to US$246 billion over the last six months.
The report also notes a reversal of recent trends with a marked increase in new fund raisings.
On the other hand, funds are targeting to raise up to US$53 billion in new capital for deployment in 2012.
This is a significant increase on the US $30billion recorded six months ago.
DTZ latest research tracks new capital targeting direct real estate and the investment opportunities this capital is targeting.