Global Headwinds Expected To Drive Down Total Investment Volume in 2022
Investment volume is expected to be down by up to 10% in all three major global regions surveyed by CBRE.
Full-year investment volume is expected to clock in below 2021 levels globally thanks to inflation and rising rates, but is expected to remain healthy on a historical basis, according to new research from CBRE.
The firm’s midyear global capital markets reports notes that macroeconomic headwinds are raising fears of a broad-based recession, worries that are compounded by the Russia-Ukraine conflict and ongoing pandemic-related lockdowns in China. Despite those challenges, however, all three global regions (Americas, EMEA, and APAC) registered “very strong” investment volumes in the first half of the year.
The US and Europe have both seen recent upticks in for-sale properties, with more institutions seeking to lock in gains before prices fall further and to avoid refinancing at current rates, CBRE experts say. Generally, investors in markets with stable interest rates “are not motivated to harvest gains so quickly” and are more selective about the type, location and quality of potential acquisitions.
The firm predicts macroeconomic headwinds will weigh on US investment activity in the second half of the year, resulting in a decrease of full-year volume of between 5% and 10%. However, CBRE notes that “real estate will provide an attractive hedge against inflation,” with assets with the strongest fundamentals and rent growth reaping the most capital. Foreign investment in the US is also expected to be hampered by the strength of the dollar and higher hedging costs.
In Europe, CBRE predicts full-year investment volume to be down 10% this year over 2021 levels, though a substantial amount of equity capital continues to target real estate in the region. Similarly, Asia-Pacific investment volume is predicted to come in 5 to 10% below 2021 figures; Japan and Singapore are expected to reap the most capital.