A recent report from LaSalle Investment Management found that the varying speeds of global economic recovery have made it difficult for real estate investors to develop strategies for 2011. In the UK, the United States and France, for example, the economies have only shown a modest rebound. The Asia Pacific, on the other hand, has experienced strong growth.
“Investment performance in the rapidly growing countries will be volatile, due to the waves of liquidity that wash over these less mature markets,” said Jacques Gordon, who is the Global Strategist at LaSalle, in a recent Reuters article. “Growth strategies that take advantage of rapid urbanization and a burgeoning middle class will be most successful.”
Gordon went on to add that selective residential developments in China’s second-tier cities are likely to provide the best opportunities. In those areas that are experiencing low growth, such as the United States, Japan and the United Kingdom, LaSalle predicts that real estate investments could receive a boost from the low interest rates as well as the increased flow of equity capital and debt.
“While investor appetite for risk starts to grow once again, value-add and opportunistic investing will be more attractive in the States, with core investing showing the most signs for improvement,” said William Maher, who is the head of U.S. strategy for LaSalle.
Maher went on to forecast that that the United States transaction volume is likely to reach between $150 billion and $200 billion by the end of next year. The most attractive core opportunities are likely to be in the healthcare, technology and entertainment sectors, which could potentially outpace the national average. In Europe, on the other hand, those who are seeking higher returns should set their sights upon those banks that are taking steps to reduce their exposure to property. Further recommendations include focusing on central London and retail offices while avoiding those regions that are outside of the UK’s South East. Offices in France should also provide good returns, as well as retail and logistics and France and Germany.