In 2019, the United Kingdom remains the most popular destination for foreign commercial investment.
According to the newest Wealth Report 2020 from global property consultant Knight Frank, private capital accounted for $333 billion in commercial real estate transactions in 2019, up 5% from the previous year.
Ultra-high-net-worth individuals (UHNWIs) acknowledged that property remains the most appealing asset class when compared to traditional shares and bonds, according to the annual Attitudes Survey conducted by the global real estate consultancy. hotel
Property will see 78 percent of respondents raise or retain their current allocations, ahead of bonds and equities, which will see 68 percent and 62 percent of respondents grow or maintain their current allocations, respectively.
While 24 percent of worldwide UHNWIs want to invest in commercial real estate locally, large sums of money are expected to be spent on cross-border purchases in the coming year. Specifically, wealthy investors from the Middle East and Latin America account for 32% and 24% of all international commercial property opportunities, respectively.
The office sector remains the top focus for private capital investors, with healthcare and hotels and leisure coming in second and third, respectively, as investors seek income, return, and diversity in various property types. Investors are reallocating funds due to structural change and uncertainties in other main sectors.
In 2019, the number of UHNWIs (those with $30 million or more in net assets) increased by 6%, bringing the total to over 513,200.
Knight Frank's head of capital markets research, William Mathews, says, "The amount of private capital invested in global real estate increased by 5% in 2019, from $318.6 billion in 2018. Investors are turning to commercial real estate as a method to boost returns and diversify their portfolios in the face of low and decreasing rates on rival assets." Investors from the Middle East, Europe, and Latin America have the greatest desire to invest abroad, and the United Kingdom appears to be in line to take the lion's share.
"While offices remain a significant target for private finance, previously overlooked 'alternative' industries are gaining traction, with $37 billion invested in hotels, hospitals, and retirement housing in the last year alone. As these industries mature, we expect this trend to continue."
In Hong Kong, the Coronavirus is wreaking havoc on new condo sales.
In 2020, new condo project prices are expected to fall significantly.
Only 40 apartment flats from two new mass residential projects were released in the primary market one month after the Chinese New Year (January 25, 2020), according to JLL's latest Hong Kong Residential Market Monitor Report, compared to an average of about 530 units in the previous three years. According to the survey, after developers postponed project launches, new project pricing will experience lower pressure due to increasing competition.
Developers have a habit of launching projects just after the Chinese New Year, meeting demand that has been building since the Christmas and New Year holidays. As a result, post-Chinese New Year market sentiment and sales velocity are often high.
In Hong Kong, however, Henry Mok, Senior Director of Capital Markets at JLL, stated, "Because developers have chosen to forgo launching new projects due to Coronavirus worries, the customary seasonal sales recovery following CNY would most certainly be pushed out this year. In light of the outbreak in the city, potential purchasers have also chosen a wait-and-see approach. As a result, home sales are projected to stay sluggish until the threat of contagion has passed."
During the 2003 SARS outbreak, JLL's mass residential capital values index fell by 12% from March to June, owing to the extremely dampened sentiment generated by uncertainty. The current coronavirus outbreak, like SARS, may have a large impact but may be short-lived, according to the analysis. Meanwhile, the market's longer-term prospects are still dependent on domestic residential demand and supply dynamics, as well as global economic conditions.
Nelson Wong, JLL's Head of Research in Greater China and Hong Kong, added, "In 2020, we expect mass residential prices will fall by 10% to 15%, according to our prediction. The faltering market is now under even more pressure as a result of the outbreak's added downside risk. As a result, depending on the duration and intensity of the novel Coronavirus outbreak, a deeper decrease in home costs may be feasible. Given the bleak market forecast and plentiful supply, developers may be forced to decrease stated prices when the majority of stock is available for purchase in the second half of this year."