REAL ESTATE CAPITAL FLOWS: GLOBAL DECK Q1 2021 Richard Barkham Global Chief Economist & Head of Americas Research +1 617 912 5215 [email protected]Wei Luo Associate Director, Global Capital Markets Research +1 212 984 8153 [email protected]Daniel Chang Research Analyst, Global Capital Markets Research +1 617 912 5254 [email protected]
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REAL ESTATE CAPITAL FLOWS: GLOBAL DECKQ1 2021
Richard BarkhamGlobal Chief Economist & Head of Americas Research+1 617 912 [email protected]
Wei LuoAssociate Director, Global Capital Markets Research+1 212 984 [email protected]
Daniel ChangResearch Analyst, Global Capital Markets Research+1 617 912 [email protected]
DESTINATION OF CROSS-REGIONAL CAPITAL FLOWS BY BUYER ORIGINSYEAR ENDING IN Q1 2021
6.87.4
3.0
0.1
0.3
33.0
10.4
4.0 11.1
2.5
4.0
0.3
NORTH AMERICA
SOUTH AMERICA
AFRICA
MIDDLE EAST
EUROPE
Buyer Origin with Corresponding Bubble Colour
Total Outbound (USD bn)
Change TTM Y/Y
Asia 21.2 34%
Africa 0.3 84%
Europe 10.8 41%
Middle East 7.2 65%
North America 44.4 34%
Pacific 1.0 58%
South America 0.1 72%
PACIFIC
ASIA
0.8
Each bubble represents a total international capital inflow from another region, identified in seven colours, in USD billions. Transactions exclude development sites. Source: CBRE Research & RCA (Americas), Q1 2021.
0.8
0.2
0.2
6 GLOBAL RESEARCH | REAL ESTATE CAPITAL FLOWS Q1 2021CBRE
Source: CBRE Research, Real Capital Analytics (for Americas), Q1 2021.
ARCHIVE
25
DESTINATION OF CROSS-REGIONAL CAPITAL FLOWS BY BUYER ORIGINSFY 2020
7.38.4
2.6
0.06
0.9
37.7
11.1 11.6
10.42.7
3.8
NORTH AMERICA
SOUTH AMERICA
AFRICA
MIDDLE EAST
EUROPE
Buyer Origin with Corresponding Bubble Colour
Total Outbound (USD bn)
Change from 2019
Asia 22.2 26%
Africa 0.9 31%
Europe 12.2 31%
Middle East 14.5 6%
North America 48.2 19%
Pacific 0.7 73%
South America 0.2 46%
PACIFIC
ASIA
Each bubble represents a total international capital inflow from another region, identified in seven colours, in USD billions. Transactions exclude development sites. Source: CBRE Research & RCA (Americas), Q1 2021.
0.2
0.080.6
0.09
1.1
0.08
0.07
26 GLOBAL RESEARCH | REAL ESTATE CAPITAL FLOWS Q1 2021CBRE
Buyer Origin with Corresponding Bubble Colour
Total Outbound (USD bn)
Change from 2018
Asia 30.3 33%
Africa 1.3 53%
Europe 17.8 25%
Middle East 13.7 4%
North America 59.9 8%
Pacific 2.5 80%
South America 0.3 8%
7.812.4
6.1
1.30.3
0.4
0.3
1.3
48.619.6
7.41.3
9.74.0
0.1
2.8
0.51.2
NORTH AMERICA
SOUTH AMERICAAFRICA
MIDDLE EAST
EUROPE
PACIFIC
ASIA
DESTINATION OF CROSS-REGIONAL CAPITAL FLOWS BY BUYER ORIGINSFY 2019
Each bubble represents a total international capital inflow from another region, identified in seven colours, in USD billions. Transactions exclude development sites. Source: CBRE Research & Real Capital Analytics, 2020.
0.06
0.08
0.5
27 GLOBAL RESEARCH | REAL ESTATE CAPITAL FLOWS Q1 2021CBRE
APPENDIX | DEFINITIONS
Currency Conversion
The transaction prices are recorded in 76 different local currencies in CBRE’s database. They are converted to USD (U.S. Dollar) for global comparison based on two methods:
- Floating exchange rates: Non-USD prices are converted using the average per-USD exchange rate of each corresponding quarter. For instance, a transaction in Q4 2017 will be converted using the average quarterly exchange rate of Q4 2017.
- Fixed exchange rates: Non-USD prices are converted using the end-of-quarter per-USD exchange rate of the latest quarter. For instance, all transactions in this document are converted using the end-of-quarter exchange rate of Q3 2018.
If not specified, currencies are converted using floating exchange rates in this document.
Regions and Cross-Regional
There are seven identified regions in this document: Asia, Africa, Europe, Middle East, North America, Pacific and South America.
- Intra-Regional: Cross-border purchaser from another country in the same region.
- Cross-regional: Cross-border purchaser from another country in a different region.
Global All-Property Yield
A weighted composite of office, retail and industrial average prime yields of fifty selected global cities. Prime yield is calculated as NOI divided by the total acquisition cost (purchase price and purchase costs), which an investor would expect to receive in the first year when acquiring a Class A/A+ office building in a prime location, assuming the property is fully let at current market value rents. Please note in the Americas, the yield is more commonly known as cap rate, based on stabilized properties with vacancy levels close to market averages.
28 GLOBAL RESEARCH | REAL ESTATE CAPITAL FLOWS Q1 2021CBRE
APPENDIX | DEFINITIONS CONT.
Global Bond Rate
Defined as a quarterly average of 10-year government bonds, in end-of-period values, of twenty-two selected countries.
Composite Yield – Office, Retail, Industrial
The prime yield of each sector is calculated as NOI (Net Operating Income) divided by the total acquisition cost (purchase price and purchase costs), which an investor would expect to receive in the first year when acquiring a Class A/A+ office/retail/industrial building in a prime location, assuming the property is fully let at current market value rents. Please note in the Americas, the yield is more commonly known as cap rate, based on stabilized properties with vacancy levels close to market averages.
Real Estate Spread over Government Bond
The difference between the prime all-property yield, as defined earlier, of a market/city and the corresponding 10-year government bond rate in that country.
Real Estate Investment Return
The real estate industry has multiple ways of calculating total investment return, a widely used valuation and performance measurement. CBRE and MSCI generally agrees with GIPS’s (Global Investment Performance Standard) methodology, which indicates:
Total return = capital growth + income return
Capital growth represents the change in property value relative to the capital employed;
Income return is defined as income receivable net of nonrecoverable expenditures as a percentage of the capital employed.