Economy Watch: Global Investors Still Prefer North American CRE

While global investors still prefer the office sector best, multifamily and industrial are close seconds, according to CBRE's 2017 Global Investor Intentions Survey.
Source: CBRE Global Investor Intentions Survey 2017
Source: CBRE Global Investor Intentions Survey 2017

Investors around the world aren’t panicking when it comes to commercial real estate, and especially not North American real estate—they still want a piece of the action. That’s one of the prime takeaways from the CBRE Global Investor Intentions Survey, which was released this week based on input from about 2,000 investors (and coming on the heels of the company’s Americas Investor Intentions Survey, released last week).

Fully 84 percent of respondents worldwide expect their investment activity to be the same or greater this year than in 2016. North America is the most preferred region for deployment of real estate capital, with 54 percent expressing a preference for it, compared to 48 percent last year. Western Europe is second, with 24 percent expressing a preference for that region.

The queried investors have some worries, of course, but politics doesn’t actually top the list. The No. 1 worry is a “global economic shock undermining occupier demand,” according to the CBRE survey. No one has forgotten 2008, it seems. Next in the worry column is faster-than-expected interest rate hikes, a property bubble and (related to that) CRE oversupply.

Global political instability is somewhat of a worry—that is, conflict or terrorism spooking markets and undermining CRE values—but local political instability (local, as in what happens within countries themselves) isn’t so much of a worry.

Overall, investors still like the office sector best, but multifamily and industrial are strong as well. By contrast, the preference for retail has contracted considerably. In 2016, 21 percent of investors CBRE surveyed worldwide expressed a preference for retail. For the 2017 survey, only 12 percent did.