- North American-invested stock edged down by less than 1% in 2012, triggered by ongoing de-leveraging. Because of their limited size, strong growth in Canada and Mexico only partly offset U.S. weakness.
- Investors and lenders have remained wary. However, investors foresee more supportive funding conditions moving forward. Consensus expectations might be unrealistically anchored on peak of the cycle levels.
- Investment volumes were up by 12% in 2012, the highest of any region globally. Based on our Fair Value Index methodology TM, US markets are classified as the most attractive region, ensuring future volume growth.
- With almost all markets attractively priced, investors need another differentiator. Considering the high level of market liquidity, we would expect more international investors to focus on the U.S. going forward.
CHICAGO, May 3, 2013 (GLOBE NEWSWIRE) -- DTZ today released the DTZ "Money into Property 2013 North America" report, the first ever edition for the region. Invested stock edged down by 0.5% across North America in 2012, with U.S. down by 1% and only partly offset by 8% in both Canada and Mexico. Deleveraging continued across North America in 2012, with equity up 2% and debt down 2%. But, the repercussions of this continued deleveraging will be less severe than in Europe.
A report accompanying this release is available at http://media.globenewswire.com/cache/23705/file/19492.pdf
Property market sentiment remains mixed, despite the improving macro outlook. Lenders are more cautious than investors in our annual global survey. Most investors feel buying opportunities have returned to normal and that debt availability has improved. In our view, market sentiment has been slow to improve due to inflated expectations with many investors of a quick return to peak-of-the-market fundamentals. Despite these misperceptions, North American fundamentals have improved measurably during 2012, which can be evidenced by a number of top rankings for the region in a global perspective.
DTZ reports that global investment transaction values of commercial real estate in 2012 were up 3.5% from 2011 levels at $475 billion US dollars. Strong 15% growth in North America has offset declines in Europe (where the Euro crisis contributed to an appreciation of the dollar relative to the Euro) and in Asia Pacific. This makes North America the fastest growing region globally in 2012.
John Wickes, Head of North American Research said, "DTZ's Fair Value Index TM (FVI) for the U.S. is currently at the highest level since 2005, with a score of 87. DTZ has ranked the US as most attractive region globally, with no unattractive markets in our coverage universe. Despite being less attractive, Europe and Asia Pacific also offer many good investment opportunities. "
John added, "This is not really surprising, given that our classification is based on the difference between expected and required returns for each market. Lower bond yields and reduced investors' risk aversion have brought down the required "hurdle" rate well below our forecasted market returns. In many markets, the prolonged lack of new development activity and modest improvement in demand for space has also increased our expected returns. The net effect of these two trends is that all North American markets are classified as attractive."
North American market liquidity remains the strongest of any region in the world. We measure liquidity by taking the actual annual transaction volume divided by the invested stock at year-end. North American liquidity has already returned to its historical 10-year average. This liquidity is driven primarily by a broad range of domestic investors, which is consistent with historical trends.
Hans Vrensen, Global Head of Research at DTZ commented, "New generations of Asian investors continue to emerge onto the global investment market. But, as risk aversion recedes further, many European and American investors are also expected to return to a more active international diversification strategy in the coming years.
For both new and returning investors in the markets, we think that apart from the currently abundant relative value, good liquidity is essential. If you cannot buy into and then later sell out of a market, relative value is immaterial. Based on this, we highlight the U.S. alongside the UK, Germany, China and Japan as especially attractive to international investors."
DTZ, a UGL company, is a global leader in property services. We provide occupiers and investors around the world with industry-leading, end-to-end property solutions comprised of leasing agency and brokerage, integrated property and facilities management, capital markets, investment and asset management, valuation, building consultancy and project management. In addition, our award winning research and consulting services provide our clients with global and local market knowledge, forecasting and trend analysis to make the best long-term decisions for their continuous success far into the future. DTZ has 47,000 employees including sub-contractors, operating across 208 offices in 52 countries. For further information, visit: www.dtz.com
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UGL Limited (ASX:UGL) is a global leader in outsourced engineering, property services and asset management and maintenance delivering essential services that sustain and enhance the environment in which we live. UGL comprises three business units including Engineering, Operations & Maintenance and Property providing services across the power, water, rail, resources, transport, communications, defence and property sectors. Headquartered in Sydney, Australia, UGL operates worldwide across 52 countries employing over 56,000 people.
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CONTACT: FOR FURTHER INFORMATION CONTACT: Nigel Almond Head of Strategy Research DTZ +44 (0)20 3296 2328 Nigel.email@example.com John Wickes Head of North American Research DTZ +1 312 424 8087 John.firstname.lastname@example.org Hans Vrensen Global Head of Research DTZ +44 (0)20 3296 2159 Hans.email@example.com Media please contact: Richard Lindberg: +1 312 424 8172Source: DTZ, a UGL company