U.S. Commercial Real Estate is New Target of Global Investors

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The amount of global capital targeting commercial real estate is expected to jump in the next year, with the U.S. the biggest recipient, a new report says.

DTZ Research estimates $281 billion will be available for investment in commercial real estate purchases in 2011, a 22 percent increase from its earlier estimates. The U.S. is expected to see a 54 percent increase in activity, while Asia Pacific might see a 29 percent bump, the consultancy's latest report says. (Europe remains the largest target market.)

In the first half of 2010, global investment doubled from the first half of 2009, rising to $133 billion, DTZ found. Growth in Asia Pacific tripled, while European investment jumped 86 percent. But the U.S. was flat, with many lenders keeping undervalued property off the market.

"The current attractiveness of the U.S. is in stark contrast to the situation a year ago," said Nigel Almond, DTZ's associate director of forecasting and strategy, in a press release. "Most U.S. markets were cold, offering expected returns below risk adjusted required returns.

"This opportunity remains largely unexploited to date, since transaction volumes in the U.S. have not yet seen the levels witnessed in Europe and Asia Pacific."

Publically-listed companies, which have been sitting on the sidelines, are re-entering the market, accounting for 17 percent of transactions, compared to only 4 percent in 2009, the consultancy says.

The majority of investors are targeting multiple countries, although more are now focusing on single countries, the researchers. Of those aiming at single countries, 51 percent are focused on the U.S., the report says.

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