HULT Private Capital Sees a Return to Commercial Real Estate Investment

HULT Private Capital is seeing increasing interest in commercial real estate

Image courtesy of CBRE data

Commercial real estate markets are hitting pre-Covid highs again across EMEA, North and South America, and the Asia-Pacific region

The abundant liquidity combined with low bond yields and rising inflation is causing investors who have become wealthy during the pandemic to shift their capital into commercial real estate.

– Mark Johnson, HULT Private Capital

LONDON, UNITED KINGDOM, Nov 23, 2021 / – Real estate fund leader HULT Private Capital sees a massive surge in commercial investment volume in Q3. This increase is in line with global results also achieved by global real estate advisor CBRE, whose commercial investment volume rose 95% year over year in the third quarter.

According to HULT’s Mark Johnson, this drive for new acquisitions is a combination of several factors. “Firstly, half of the world’s population has been vaccinated, a huge undertaking that is now showing its first results. Delta variant infections are slowly controlled, with infections gradually subsiding in most developed countries. Barring lingering supply chain issues, global GDP is on track to return to pre-pandemic levels by the end of the year. There is abundant liquidity combined with low bond yields and rising inflation, causing investors who got rich via the stock markets during the pandemic to shift their capital into commercial real estate in the third quarter. This increase will set a pace in 2021 to set a new record in volume for annual investments. “

The global investment volume grew by 95% in the third quarter totaled 315 billion US dollars. All three regions, the Americas, EMEA, and Asia-Pacific, reported intense investment activity, all of which are at 2019 levels. The global volume has exceeded the volume of 2020 by 44% and the volume of 2019 by only 3% year-on-year.

According to HULT Private Capital, investor interest in multi-family projects in the USA, Germany and Sweden drove volume growth in the third quarter. Industrial and logistics property purchases remain popular in the UK and most other regions. You have seen a slump in the investment volume in office and rental apartments, which are still in a recovery phase, but the stable value of high-quality properties and the increasing number of bookings for viewings suggest an improvement in market conditions in this sector as well.

The reopening of the economy and the reduction in Covid infections in the UK and the rest of Europe have restored investor confidence and brought the UK and other EMEA countries back to pre-pandemic trends, according to HULT Private Capital. According to CBRE data, the region’s total volume in the third quarter rose 56% year over year to $ 94 billion in the third quarter. In addition, the investment volume has increased by 10% since the beginning of the year in the first three quarters of last year and almost at the same level (-2%) as the record volume of 2019.

The prior-year volume in the third quarter was led by Sweden (186%), the Netherlands (126%), Germany (96%) and the UK (68%), mainly driven by the rapidly growing multi-family sector. According to HULT Private Capital, there has been a strong movement in the UK industrial sector that has attracted significant capital from overseas investors. The volume shares of the multi-family and industrial sectors were 27% and 19% respectively. Both benefited from a surge of pandemic, with capital flowing into these two above-average sectors. The supply of multi-family housing in the UK and other markets is expected to increase, further spurring investment growth across the region after Germany, Sweden and the Netherlands already have increased multi-family supply. Due to the growth of e-commerce, investor appetite and user demand for industrial real estate remained strong during the pandemic.
A spike in hotel investment in the third quarter and very few stress reliever sales suggest that the worst is over for this sector.

Across the pond
In America, the investment volume showed remarkable strength in the third quarter of 2021. This was led by the US multi-family sector. In the third quarter there was an investment surge of 152% year-on-year and 74% year-to-date. Excluding corporate-level transactions, investment increased 141% year over year. Compared to the pre-pandemic trend, accelerated growth in the U.S. Sun Belt, 18 southern states from Florida to California, this year offset a lack of quality office transactions in gateway markets. However, a comeback in trophy-level office sales, like Google’s recent announcement of its proposed Manhattan purchase, is eagerly anticipated and is critical to a full recovery in commercial real estate investment.

The share of the American multi-family sector in the total volume rose to 39% in the third quarter and was thus well above the average for the years 2015-2019 of 28%. Phoenix, Atlanta and Dallas led the Sun Belt markets, and all boomed in population and employment growth, resulting in significant capital inflows over the past year.
Meanwhile, America’s industrial sector has relaxed again after an exceptional performance of two years and its share of the total volume has fallen to 23%.
Asia Pacific

Investment volume in the Asia-Pacific region rose 24% year-over-year in the third quarter to 34 billion with supply chains and commodity inflation have dampened the region’s economic outlook and likely similar impacts on investment there.

Exceptions are third-quarter growth in Hong Kong (354%), Australia (121%) and Japan (89%) year-on-year growth. The $ 2.5 billion sale-and-lease-back of Dentsus headquarters was a common trend with companies removing owner-occupied properties from their balance sheets. Other important office markets such as Seoul, Melbourne, Shanghai and Hong Kong developed well in the third quarter.

Asian hotel investment has still not picked up, waiting for more travel restrictions to be lifted. Because of this, the retail and multi-family sectors have potential upside in the fourth quarter and 2022 as capital seeks countercyclical opportunities in a tight yield environment.

Overall global outlook
Global investments in commercial real estate are expected to have a strong fourth quarter and are expected to hit a new record in 2021. HULT Private Capital sees the dynamism in multi-family and industrial investments, with retail and hotel investments expecting a recovery with increasing international mobility. The much-anticipated office rebound is already happening in the suburban markets, and the urban markets are expected to follow suit in 2022. HULT Private Capital anticipates an annual increase in global investment volume of around 28% in 2021, with more moderate growth of 8% in 2022.

For more information on HULT’s services, visit or contact us at [email protected]

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HULT private capital
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November 23, 2021, 12:46 GMT

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