As summer gives way to fall, we can’t help but observe what an unusually active period it has been for global real estate capital markets, with increased capital flows and lively competition for the best assets. It is clear that since late last year, institutional investors have returned to the market in more meaningful numbers, pursuing a broad range of strategies and using the breadth of investment vehicles at their disposal. It appears that the weight of uninvested allocations has now reached a level where a continued acceleration of capital flows into the sector seems inevitable.
With the prospect of higher rates and inflation looming, global investors are looking to real estate for stability, current yield and longer duration, accompanied by lower leverage than in the prior cycle. Real estate investment officers have responded with a stepped up pace of activity, despite concerns about pricing and a very competitive market. With memories of the last market run up fresh in everyone’s mind, the overwhelming majority of buyers are maintaining discipline, but at the same time expressing some frustration that there haven’t been more bargains.
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