Investors around the world for the first time since 2009 has reduced the volume of investments in real estate (except building land) due to concerns about global economic risks, according to the research consulting company Cushman & Wakefield, cited by the Financial Times. From the beginning to the end of June real estate has invested $919,7 billion, 5.7% less than in 2015.
Among the factors that triggered the reduction of investment after seven years of continuous growth — an unstable situation of Chinese stock market, migration in Europe and the results of a referendum on British exit from the European Union, said the head of Department of investment strategy in Europe, Cushman & Wakefield David Hutchings. “The process [of weakening of the interest in real estate as an investment tool] started in the summer of 2015 with the devaluation of the yuan that raised the concern of investors about what is happening in China. In addition, demand weakened in view of the increasing problems in Europe, such as migration and British exit from the EU and then the US elections,” he explains.
According to him, the level of acceptance by investors of risk higher than a year or two ago, while demand for property remains high. “When we observe still a high risk and at the same time high demand, the question arises, whether it is a temporary pause or the market peaked?” says Hutchings.
Investors, he says, focused on the real estate of the highest quality in the most attractive cities, but this property a bit. According to Cushman & Wakefield, the most attractive markets remain London and new York. As of June, investors have invested in property in both cities for about $25 billion ($of 24.89 billion in new York and $24.88 billion in London). But because of the outcome of the British referendum and the high prices, the volume of investments in the London property market dropped by almost half, whereas in new York increased from $15.8 billion a year earlier.
Real estate investment in Paris, which ranked third, has dropped from almost $10 billion to about $7.5 billion In the ten top markets include Los Angeles, Amsterdam, Sydney, Berlin, Hong Kong, San Francisco and Shanghai.