The US has now become the biggest real estate investment market in the world according to Cushman & Wakefield. The performance of the US real estate market is likely to improve further as a result of economic growth, with QE and interest rates sitting low which will mean that investors will look to show an interest in property. Some of the changes in key trends such as technology, sustainability and demographic are being led by the US and Canada. The volume of global investment is forecast to increase by 11% during 2015 to $1.34 trillion.
During 2014 there was a decrease for the first time in five years in real estate investment as it dropped by 6.3%, however, this is as a result of the drop in the land purchased in China.
In America, the investment Market, during 2014, saw yields drop to historic lows, with volumes rising by 11.4% which puts them at 71% of their peak in 2007. North America is now at the front of the global market and the economy is a main focus for growth on a global scale whilst the property market takes advantage of increased levels of domestic and international liquidity as well as an improving occupational sector.
In Latin America, conditions were tough for both the market and economy as the price of commodities dropped which resulted in a level of uncertainty. Investors opted to step away from those markets that were emerging which saw demand drop by 17%. Overall, market by market trends were varied with Brazil increasing and Mexico decreasing but this was off the back of an excellent performance in 2013.
Performance is expected to pick up again during 2015, with the US being the main driver with rental growth and rising values from yield compression all helping. Average gains could be seen in Latin America, with investors looking further afield for opportunities but in some markets, the occupier performance will remain unresponsive. North America is expecting a projected 15% growth in volume whilst Latin America is expecting around 8%.
In the US leasing markets were not as quick to respond to the Fed’s stimulus as investment and finance, but they are now experiencing a growth and many cities and sectors are now seeing development opportunities and growth pressures as a result of supply tightening. In gateway cities, the initial rush for investment has been preceded by more capital looking to develop in the same markets as it looks to move into higher risk markets.
The market in Canada during 2014 experienced high prices and a slowing economy and it is likely to be mixed again this year, however, the long term prediction and potential of the market should see more foreign investors showing an interest helped by the currency being more competitive.
There is a long term potential in Brazil but Mexico is currently emerging as a leading market, with younger workers, education improving and the way in which the regions finds a fine balance between work and play. The changes are hitting deeper which is why investment from foreigners is welcome whilst growth in the US will also play a part.