RCA Insights

Top 50 Global Investors: The Big Get Bigger

By on December 29th, 2017

The big got bigger in 2017 as the top 50 investors in global commercial property collectively added $31.1 billion to their portfolios for the year. To be sure, they bought more income-producing commercial property, acquiring $145.7 billion, but they also sold investments priced at $114.5 billion.

The question here is if the activity of the largest investors signals a broader trend. There is a notion in the industry that the biggest investors will have more insight into market trends and thus what they buy can be a signal of what is to come in the market.

The biggest investors worldwide are not necessarily the most active buyers and sellers. Some investors hold numerous assets but focus more on steady, prudent management of income rather than grabbing headlines about their most recent deal. The Real Capital Analytics global data set tracks the holdings of each investor worldwide and for this analysis we looked at the top 50 investors with respect to the assets they hold.

These top 50 investors have posted a declining pace of acquisitions of income-producing properties in 2016 and 2017. Their activity broadly mirrors that of the global market with falling deal volume in the same periods. Still, the headline figure does not exhibit their true interest in the sector.

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Into 2017, for instance, while the pace of acquisitions by these top 50 investors fell 2% year-over-year, the pace of their dispositions fell 14% year-over-year. In total, this group of investors continues to find opportunities in income-producing commercial real estate. On a net basis, these investors increased their exposure to commercial real estate at a faster pace in 2017 than they did in 2016.

Looking at the investment activity of these top 50 investors by property sector, the appetite for investment on a net basis was strongest for the apartment sector in 2017. Despite record high prices for apartments, this group of investors added assets priced at $18.3 billion to their portfolios. Again, despite high prices, there are yield opportunities in the apartment sector that still look attractive to fixed income investors.

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The apartment market as an investment vehicle is a new concept in many countries outside of the U.S. Institutional and cultural barriers limited the development of the apartment market as a vehicle for institutional investors in many countries. As such, at 55% of the total, the majority of the apartment investments made by these top 50 investors were located in North America. These investors though are chasing a burgeoning apartment market in Europe. Spain, in particular, has been on the target list of the top 50 global investors in 2017, representing half of all their apartment investments in Europe.

All investors do not need to be in the market all the time. While we have looked here at the total activity for the top 50 owners of commercial real estate worldwide in 2017, only 49 were involved in acquisitions while 47 were involved in dispositions. The simple difference in this count also points to the fact that the largest global real estate investors are still finding investment opportunities.

Shayan Malik and Alexis Maltin contributed to this article. 

Jim Costello

Jim Costello

Senior Vice President
jcostello@rcanalytics.com

Jim Costello has worked in the CRE space on issues of urban economics since 1990, including a 20-year stint at Torto Wheaton Research. Jim expanded the reach of the Torto Wheaton Research team developing forecasts of global market fundamentals. He also developed approaches to pair the forecast results with frameworks to answer investor questions on asset values and relative investment opportunities.

In the aftermath of the Global Financial Crisis, Jim provided advice to the Treasury Department and helped educate these professionals on commercial real estate performance. Jim is a member of the Commercial Board of Governors of the Mortgage Bankers Administration, where he helps policy makers understand the commercial real estate industry.

Jim is expanding the capabilities of the Real Capital Analytics team on issues of real estate market dynamics. Jim has a master’s degree in economics and is a member of the Counselors of Real Estate.