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The global search for income has prompted many of the world's sovereign wealth and pension funds to increase their exposure to commercial property.
That could bring an influx of foreign investment to SA's office, retail and hotel markets in the next few years.
In fact, Johannesburg now ranks among global real estate group Jones Lang LaSalle's top 20 global emerging property investment destinations.
Jeremy Kelly, director of global research at Jones Lang LaSalle, said during a visit to SA last week that though the world's wealthiest investors continued to target prime office and retail properties in traditional gateway cities like London, Paris, New York, Hong Kong and Tokyo, opportunities were becoming scarcer as capital chased a limited pool of assets.
That is prompting investors to search for real estate investment opportunities in other countries and cities. Direct commercial real estate transactions are expected to increase by about 13% this year to between US$450bn and US$500bn.
Kelly says 30 cities, mainly across the US, the UK, Europe and Australasia, accounted for half of total global real estate investments between 2010 and 2012.
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He expects global investors to widen their search for property investment opportunities to 50 cities over the next five or seven years.
China, India, Brazil, Turkey and SA will be key growth areas, as corporate leaseholders and retailers increase their presence in emerging markets.
"The world's real estate investors are bound to follow corporates into these markets," says Kelly.
Though Africa as a continent is starting to make its mark on the world real estate stage, Kelly says Johannesburg is the only African city likely to be included in the global top 50 cities by 2020. The ranking reflects a city's desirability as a business and real estate investment hub.
SA has already seen an increase in foreign investment into listed property stocks and these investments are expected to accelerate now that the JSE has adopted the internationally recognised real estate investment trust structure.
Growthpoint Properties executive director Estienne de Klerk says offshore investors have increased their stake in the JSE's top-40 counter from 3% in 2009 to 18% currently.
Source: Financial Mail via I-Net Bridge
Source: I-Net Bridge
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