Real Estate Investing
Australia Investment Report
Cushman & Wakefield
Cushman & Wakefield has prepared its Investing in Australia reference booklet.
Australia is an attractive investment destination for international investors, noted for its comparatively high yields and stable return profile. With this is mind, the document covers the fundamentals of the Australian commercial real estate market for new investors. Topics covered include: the economy, demographics, political system and a market overview across the three main sectors.
Understanding The Commercial Real Estate Investment Ecosystem – An Early Warning System Prototype
World Economic Forum
The World Economic Forum’s Shaping the Future of Real Estate initiative defines real estate asset ecosystems and how real estate bubbles could be limited through innovative solutions. This year’s reports are the direct result of a collaborative process with leaders from government, civil society and the private sector, in particular the real estate and financial services industries, as well as investors.
Australian Investment Market Update – Q4 – 2015
Cushman & Wakefield
Cushman & Wakefields Australian Investment Market Update provides not only s snapshot of real estate investment activity in Q4 2015 but also for the past year. Key findings of the report include:
- Investment momentum has continued to build over the year, with Q4 being the strongest quarter recorded for calendar year 2015 at $9.4bn. At the year’s end, total annual investment volume reached $29.9bn, falling 14% short of last year’s post-GFC record of $34.8bn.
- The retail sector set a quarterly investment record with $3.0bn of assets transacting over Q4 2015. The final quarter figure followed steadily increasing activity through the year, resulting in an annual volume of $7.2bn – a 25% increase on 2014. Nevertheless, the office sector ended the year as the most transacted asset class, recording an annual volume of $14.9bn, accounting for almost 50% of the national volume.
- The flow of offshore capital into Australia not only continued, but intensified, in 2015. Following the $13.8bn invested by foreign entities into Australia in 2014, a further $15.4bn was invested in 2015. Singaporean-based investors ($4.5bn) continue to account for the majority of overseas capital in 2015, with Chinese investors ($3.7bn) in second place despite a lower number of transactions. International investors (those with a global platform) were significantly more active in 2015 committing $2.6bn – double their 2014 amount.
- In looking to 2016, many of the market characteristics evident at the start of this year remain on show. The main difference being that the market is further through the cycle. Nevertheless, it does not appear that the investment market will significantly slow in the near term and so we expect volumes to be sustained at least over H1 2016.
- Anticipated US Federal Reserve hikes will likely place upward pressure on Government bond yields, but this is not expected to flow onto the property sector in the near term. Rather there remains scope for further yield compression in selected markets and sectors as abundant domestic and offshore capital is yet to be deployed. In general core assets, or those with a strong value-add play, will remain in favour and generate the most competition.
2016 Global Investor Outlook
Colliers International’s 2016 Global Investor Outlook found Australia remains a top destination for investment, popular with both local and offshore investment. On a global basis, only London ranks higher than Sydney and Melbourne as cities that investors want to be in. To inform the report, more than 600 global investors – from sovereign wealth to private equity firms – shared their global and regional forecasts for 2016 and beyond.
Local trends to emerge from the survey include:
- Globally, more than half of all investors are looking to expand their portfolios
- Australian and New Zealand investors continue to view CBD office as their preferred investment class, followed by residential development sites as the second most popular investment class.
- Domestic investors remain unwilling to take on higher levels of risk to achieve higher returns, and are ranked among the most risk averse investors globally.
Global Market Outlook 2016 – Trends In Real Estate Private Equity
EY’s latest Global Market Outlook highlights the vitality and robustness of the real estate fund industry as it seeks out opportunities in new markets.
Emerging Trends In Real Estate – Asia Pacific 2016
PwC / ULI
What are the best bets for investment and development in 2016?
Emerging trends in real estate® gives a heads up on where to invest, which sectors and markets offer the best prospects and trends in the capital markets that will affect real estate.
The study reflects the views of almost 350 influential leaders in the real estate industry and highlights include:
- What to expect and where the best opportunities are
- Trends in the capital markets, including sources and flows of equity and debt capital
- Indications of which property sectors offer opportunities and which ones to avoid
- How the economy and concerns about credit issues are affecting real estate
- Which metropolitan areas offer the most and least potential
What Is Real Estate?
All forms of commercial real estate investment are underpinned by a stock of physical assets — worth an estimated seven trillion dollars — which provides elements of bond-like income with equity-like capital growth. However, real estate is a broad asset class and there are numerous ways of accessing it, through both public and private markets. From direct ownership of assets to buying shares in listed or unlisted securitized vehicles, from ETFs to derivatives, the opportunity set is wide-ranging. This diversity leads to sometimes conflicting views of real estate as an asset class. This research paper helps explain some of the idiosyncrasies of different forms of real estate investment, while demonstrating how accounting for structural and measurement issues can provide a more consistent view of the asset class.
Investment Excellence In A Transformed Real Estate Market
McGladrey And PrivcapRE
In a world of unprecedented cross-border capital flows and rising valuations, it has become increasingly important for institutional real estate investors to ensure investment excellence from all of their partners. This report, produced in partnership with McGladrey, taps into PrivcapRE’s extensive network of experts who provide comprehensive intelligence on the issues facing dealmakers, investors, and advisors as they confront the challenge of finding relative value in highly competitive property markets. In a world of unprecedented cross-border capital flows and rising valuations, it has become increasingly important for institutional real estate investors to ensure investment excellence from all of their partners. This report, produced in partnership with McGladrey, taps into PrivcapRE’s extensive network of experts who provide comprehensive intelligence on the issues facing dealmakers, investors, and advisors as they confront the challenge of finding relative value in highly competitive property markets.
Capital Attraction – The Rise Of Australia As An Investment Destination Stephen McNabb, Head Of Research
CBRE – Australia Research
A presentation to the Real Estate Initiative of the Centre for Applied Economic Research inaugural annual Real Estate Symposium.
Capital Attraction: The Rise Of Australia As An Investment Destination
Stephen McNabb, Head of Research at CBRE, presented a paper on foreign investment in Australia at the UNSW Real Estate Conference. Stephen looked at Observations on capital flows to Australia, What’s attractive about Australia ? Offshore investment into residential real estate and Cross border capital flows outlook and implications.
Investor Views: Real Estate Attractive Despite Pricing Concerns
Using information from their recently released Preqin Investor Outlook: Alternative Assets H2 2015, Preqin explores institutional investors’ objectives, satisfaction with returns and activity within the real estate asset class.
Bricks And Mortar Underpin Australia’s Concentrated Private Wealth
In strategic terms Australia’s wealth management and superannuation sectors are a significant and vital part of the broader economy. Yet, in real terms, the dollar value of superannuation assets is in fact challenged quite starkly by the importance of residential property in Australians wealth. Rice Warner have find almost half (48%) of the superannuation market was represented by directly held property net of debt. Directly held property investments alone are equivalent to approximately 65% of superannuation assets.
Real Estate Private Equity – What’s In A Real Estate Private Equity Case Study?
In this tutorial video, you’ll learn what to expect in real estate private equity case studies and you’ll get an example of a real case study with the solution file and a walk-through of the key points.
Institutional Investor Delivering Alpha – Real Estate
Jonathan Gray, Blackstone’s global head of real estate, spoke at a recent CNBC conference on a range of topics, including values, foreign investors and where the industry is in the current cycle. Blackstone recently raised more than US$15 billion for real estate investing from a range of global institutions – the largest private real estate fund raising ever completed.
For the video – Click here
For the transcript – Click here
Property Council Of Australia Quarterly Survey
The ANZ/Property Council Survey gauges the property industry’s:
- sentiments about the outlook for Australia’s national and state/territory economies;
- views on property asset class performance;
- employment intentions;
- expected work flows; and
- critical industry drivers.
Every quarter the survey canvasses the views of over 1,800 respondents – including, owners, developers, agents, managers, consultants and government – across all major industry sectors and regions.
Is Real Estate Bond-Like?
Peter Shepard, Peter Hobbs, Yang Liu
In the short term, real estate’s stable income flows and smooth valuations give some investors the impression of bond-like behaviour. But analysis with MSCI’s IPD data set and new MSCI analytic tools show that this impression is misleading: the long-run behaviour of the asset class is much more cyclical and growth-sensitive.
The research has significant implications both for asset allocation decisions and risk management. Real estate’s higher yields come with higher systematic risk, while tenant credit and interest rate risk may be secondary. While it is not the free lunch some would hope for, MSCI find evidence that private real estate generates a liquidity premium in most markets around the world, and inefficiencies in international markets still leave large opportunities for diversification globally.
Real Estate: 101
IREI and Glenn Mueller
Presented by Glenn Mueller, Real Estate Investment Strategist, Dividend Capital, and Professor, Burns School of Real Estate, University of Denver. This is a six-part video series for newcomers to the real estate asset class who want to gain a thorough understanding of its role in a multi-asset portfolio, as well as property fundamentals, investing, capital markets and portfolio management.
Emerging Trends In Real Estate Asia Pacific
Undertaken jointly by PwC and the Urban Land Institute, this report provides an outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the Asia Pacific region including Australia.
What Constitutes Property For Investment Purposes?
A Review of Alternative Real Estate Assets IPF Research Programme 2011–2015
This report was commissioned by the Investment Property Forum under its Short Paper Series to explore what constitutes property for investment purposes given the rapid growth of investment in non-traditional areas of the real estate market. The research team examined prior research, analysed available data and conducted interviews with investors and fund managers to explore definitions of real estate, common features and the challenges faced by the real estate investment community.
How Is The World Changing? How Should We Change?
The world around us is almost mad with change. Technology, demographics, politics, economics and society are presenting new ideas, new paradigms and new challenges every day.
…and the real estate industry is not immune to a changing environment.
It is difficult to have a conversation with a colleague in real estate without talking about change. Capital is changing—both on where it’s coming from and where it wants to go.
Users or real estate are changing their expectations of what a building is worth and what they do with it. Investors, developers, financiers, owners, and operators of real estate are changing as well, with new employees, new sources of capital and perhaps new strategy.
As Alvin Toffler so eloquently stated, now is very much a time when leaders have to constantly learn, unlearn and relearn. Are the leaders of real estate ready to do so?
A Guide To Real Estate Investing Strategies
Securitisation and the increased sophistication of the real estate industry have led to new ways to repackage property assets to create a broader menu of investment opportunities. However, the risk, return and liquidity attributes of these investments vary greatly. This paper provides an overview of different real estate investment strategies based on three risk-return styles (core, value-added and opportunistic) and four quadrants of real estate investing, based on whether they are equity or debt and traded in the public (listed) or private markets.
Real Estate As A Long-term Investment – The Impact Of Regulatory Change On Long-term Investing Strategies And The Real Economy
Institutional investors such as pension funds and insurance companies invest in real estate as part of their long-term investment allocation. The long-term, secure, rental income stream associated with assets let on long leases to financially sound tenants, often incorporating inflation-hedging characteristics, has made real estate particularly appropriate for duration matching of assets and liabilities. While the investment emphasis is on the income stream, long-term investors further benefit from higher yields from the liquidity risk premium associated with real estate. This ability to enhance returns through long-term investing in real property greatly assists the ability of institutional investors to maintain their ability to meet their obligations in the future.
The paper by INREV looks at real estate as a long-term investment including what differentiates long-term investing, the importance of counter-cyclical strategies for the real economy, the importance of real estate to the real economy, responsible investing, regulatory impact on the post crisis investment strategy and new regulations and real estate.
The Making Of An Asset Class
Roy Hilton March
Wharton Real Estate Review
With the advent of Modern Portfolio Theory in the 1950s and its subsequent adoption by institutional investors in the 1960s to 1980s, commercial real estate went from cottage industry to bona fide asset class. But the obstacles to its ownership (including capital intensity, lack of transparency, operational requirements, geographic specificity and illiquidity) made real estate largely inaccessible to all but the largest investors. Twenty years ago, a remarkable transformation occurred: liquidity in real estate brought on by the rise of public REITs, CMBS, real estate private equity funds and the abundance of capital sources. Today, real estate competes directly with stocks, bonds, currencies, commodities and other financial assets. The evolution of the sector occurred much as evolution does in nature: life-threatening conditions forced inhabitants to adapt or perish and introduced new entrants to the ecosystem. As Charles Darwin famously observed, “It is not the strongest of the species that survives, nor the most intelligent… it is the one that is most adaptable to change.” The creative destruction of the late 1980s and early 1990s forged a new species of real estate industry—more resilient than its ancestors but, as recent years attest, still vulnerable to threats old and new. Understanding the factors that catalyzed the industry’s transformation, and the lessons learned along the way, is the key to preparing for the many exciting challenges and opportunities that lie ahead.
Mezzanine Debt And Preferred Equity In Real Estate
2 April 2013
This chapter is from a book titled Alternate Investments: Instruments, Performance, Benchmarks, and Strategies and discusses mezzanine loans and preferred equity investments, which are two types of non-traditional real estate financing providing capital and liquidity to real estate owners. Unlike traditional mortgage loans, these non-traditional methods of financing have complex structures and different risks and benefits. Mezzanine loans are debt transactions in which the lender’s collateral is in the form of the mezzanine borrower’s ownership interests in other entities that own income-producing property. Preferred equity transactions are structured as equity investments in an entity that owns real property. These equity investments are structured as capital contributions to the entity and, in return, the investor receives a preferred return on its investment. The investor’s preferred return is the economic equivalent to interest on a mezzanine loan. Although each of these financing vehicles is structured differently (one as debt and the other as equity), both allow property owners to obtain funds in excess of the typical senior mortgage loan, increase the property owner’s leverage, and provide liquidity. This chapter discusses the unique structure of these financings and examines both the opportunities and risks for real estate owners, mezzanine lenders, and preferred equity investors.