The predicted upturn in the US economy will also boost the country’s property market for overseas investors, says real estate firm Collier’s International.
In their annual Global Investor Sentiment Survey, the firm says investors will be looking for ‘safe haven’ destinations to protect their money.
A survey of 500 property investors from around the world also highlighted cities which would be safe for investors including London, Paris and several German cities.
However, investors identified London and New York as being the best for ‘cross border’ investments with many predicting investments through 2013.
America is the most desirable place for global investments followed by Asia and Western Europe.
Investment obstacles
The survey of real investors’ sentiments also highlighted that many have ambitious expansion plans in 2013 and moving funds to invest in offshore investment opportunities.
And they say their expansion plans are only being blocked by a lack of quality stock and the availability of finance.
Tony Horrell, the CEO of the firm’s British arm, said: “We found that many major investors are becoming increasingly critical of where they make their major investments.
“They are more likely to look at locations in their home markets first but when they look abroad they are far more specific about which markets and sectors that interest them.”
Horrell also pointed out that the cost of lack of available finance was also proving to be a major obstacle for many investors.
He added: “This lack of availability is opening the door for new lenders to move in, in the form of insurance companies and it’s leading to the resurgence of mezzanine finance.”
Specialist property funds
The result of this investment is that there will be more activity in 2013 from specialist debt funds which are looking for higher returns than they would get from direct real estate investment.
The survey also revealed that Asian, EMEA and Latin American investors were more likely to fund their investments using cash from outside their regions.
In Asia, around 40% of deals are financed this way, in the US it’s 20% and Western Europe it is 19%. In Latin America, around a third of real estate investment is funded with US backing.
“Canadian investors are the most self-sufficient in finding the backing they need with 78% of investment funds coming locally” says Property International
The survey also found that volume of investments will continue to grow at a slow pace in Western markets but opportunities will be limited as investors focus on just a few key locations.
As the global economy improves, the sentiment survey picked up an increase in risk taking in the first six months of 2013 – most likely to be investors in the US, Latin America and Asia.
