The Americas are now the fastest-growing market for capital price gains in commercial property, the latest research has shown.
In the year to March, according to the Quarter 1 CBRE Global Office Indices MarketView report, capital values for offices across the Americas rose by 9.6 per cent – faster than any other region and comfortably above average global growth of 5.7 per cent.
“There has been a marked increase in investor interest in the Americas’ prime properties over the last year and this is reflected in the CBRE Americas Capital Value Index,” says CBRE global chief economist Dr. Raymond Torto.
More broadly, however, following a significant recovery throughout 2010 and early 2011 as a lack of funding worldwide fed through into limited stock coming onto the market, the global office market is slowing. Indeed, in the quarter just passed, hardly any growth was recorded outside the Americas as previously strong growth in Asia Pacific values continued to fall away and weak conditions persisted in economically troubled Europe.
Worldwide rental growth, too, has slowed. Amid a tempering of occupier demand in a challenging economic environment, global rents increased by a modest 1.2 per cent in the most recent quarter.
Stalled Going Forward
Going forward, an interesting debate surrounds the Asia Pacific market. Since the nadir of the global financial crisis, capital values across the Asia Pacific region generally rebounded more strongly than rents, though they are slowing now. While some commentators have suggested this may point to an overvalued market, others have interpreted it as a sign that investors are anticipating further recovery in property market earnings growth (rents).
Broadly agreeing with the latter group, CBRE believes that the Asia Pacific market is indeed ‘on the cap of a rebound’. Nevertheless, the real-estate services firm warns, any form of renewed economic uncertainty may temper such a recovery.
More broadly, however, CBRE expects markets to ‘stall’ while continued economic uncertainty persists.
“Both the CBRE Global and Regional Office Capital Value and Rent Indices in Q1 2012 reflect healthy gains when measured on a year-over-year basis,” CBRE says. “However, when examined on a quarterly basis, we note increasingly weaker advances for each successive quarter. Based on continuing mixed global economic reports, we would expect to see the markets stall until the economic and political landscape is more clearly known.”
If the past year is any guide, that will be a long time yet.