Colliers’ “Global Property Clock”: Global Prospects Improved for 2011, Yet Guarded

Investors around the world like their chances of escaping a double-dip recession, but otherwise expectations for 2011 range all over the map, according to a new Colliers International report.

November 22, 2010
By Paul Rosta, Senior Editor

Courtesy Flickr Creative Commons user zoutedrop

Investors around the world like their chances of escaping a double-dip recession, but otherwise expectations for 2011 range all over the map, according to a new Colliers International report.

That impression emerges in the “Global Property Clock,” a signature feature of the survey, which was conducted among 216 institutional and private investors representing $710 billion in assets. Asked to predict where market conditions in their regions would stand in 12 months, the largest group—22 percent—put the hands of the dial at 8 o’clock, indicating an early stage of expansion.

Another 18 percent of respondents placed the time at 9 o’clock, suggesting still more advanced growth. Slightly smaller groups offered a more guarded impression. Sixteen percent estimated that regional conditions 12 months from now will be at about 7 o’clock, translating into the market being off the mat. And 15 percent said that their “clocks” were tolling 6, meaning that conditions were still in the trough.

Portfolio expansion is in the cards for 60 percent of investors worldwide; nonetheless, the Colliers study reveals telling distinctions among regions, which encompass the United States; Canada; Latin America; Western Europe; Eastern Europe, Central Europe and Russia; the Middle East and Africa; Australia and New Zealand; and Asia. Ninety-one percent of investors in Asia said that they plan to invest in their own countries over the next six to 12 months—up 13 percent from the first quarter. Western European (81 percent), U.S. (80 percent) and Latin American (75 percent) investors are also keenly interested in domestic assets. By contrast, just 25 percent of investors in the Middle East and Africa region want to buy locally.

Instead, fully 63 percent of Middle East/Africa players are looking to buy product outside their homelands, a sentiment comparable to Western Europe (63 percent) and Asia (59 percent). Colliers singled out Western Europe for special notice; as recently as the first quarter this year, only 30 percent reported that they were looking for foreign product. U.S.-based investors, by contrast, do not share that interest; only 13 percent of those respondents said they planned to chase properties in foreign countries next year.

On the sell side, the U.S. is showing a striking spike; since the first quarter, the percentage of investors considering putting assets on the market has nearly tripled from 23 percent to 65 percent. Colliers speculates that more favorable pricing, better financing and price discovery is contributing to the surge. In Asia, too, the percentage of willing sellers has grown from 39 percent during the first quarter to 55 percent today. During the same period, Latin American interest has slipped about 10 percent to 56 percent.

Survey respondents also expect lenders to keep loosening their purse strings next year. Seventy-nine percent said that financing would be more accessible during the next six to 12 months. The cost of financing brings mixed results—only 19 percent of investors in Western Europe expect prices to slip next year, while two thirds of Asian investors and 75 percent in Latin America expect increases. In a sign of uncertainty among U.S. investors, the survey yielded no consensus about the direction of financing costs next year.