According to the 2014 Global Investor Sentiment Report just released by Colliers International, U.S. investors surveyed remain bullish on the prospects for commercial real estate during the next 12 months, with 92% of respondents expecting to increase the level of investment in their property portfolios, compared with just 8% that plan to reduce their portfolios. Reflecting investor optimism, 85% of all investors (non-US included) expect property investment conditions in the US either to improve or stay the same, while only 6% expect conditions to decline.
Investor appetite for risk is likely to increase further: 50% of US respondents indicated that they are ‘highly likely’ or ‘likely’ to take on more risk during the next 12 months, while the other 50% indicated that they were ‘unlikely’ to take on more risk. No investors responded that they were ‘not at all likely’ to take on more risk.
Among US investors, the most important factors affecting investment decisions include property fundamentals, economic growth of the region, ease of entry/exit, and yield. These factors reflect the relative economic strength of the US, as well as the attractive risk-adjusted returns still offered by most types of US commercial real estate. The least important factors to US investors were currency risk, availability of local JV partners, level of distress, and taxation. Also, despite ongoing gridlock in the federal government, political risk remains a relatively low concern among investors.
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