Research article

Private vs corporate investment

We analyse investment flows on commercial deals greater than $10 million

The amount of money invested annually in world real estate transactions of over US$10 million has not been as great among corporate and institutional investors as it has been among private companies and individuals.

Overall transaction numbers in the corporate sector are still below 2007 levels, while those in private real estate deals are now nearly a third higher. Only in cross-border trade do corporate investors still predominate.

Most of the growth in private wealth flows to real estate emanate from Asia. Private Asian transactions are now over three times that of 2007. Looking in more detail at cross-border flows of private wealth in real estate, there are distinct differences in the behaviour of Asian traders versus others.

Real estate in Europe is much more likely to attract private capital from overseas so it experiences a net inflow of funds for real estate deals from private sources. Asia, on the other hand, is a net exporter of private capital in real estate. Private Asian investors buy more real estate overseas than is sold to cross-border investors in Asia.

This situation is a complete reversal of 2007 when Asia was a recipient of private cross-border activity and EMEA an exporter of funds into property. This reversal can be partially explained by weakening EMEA Forex rates and strengthening Asian currencies, as well as increasing opportunities in the EMEA region due to the weakness of local investing institutions.

It is important to note that private wealth behaves differently to corporate entities in the cross-border sphere. This switch in Asia from importer to exporter of funds is much less pronounced outside the private sector and EMEA has remained an importer of funds among corporate entities. This is a clear example of how private sector wealth displays distinctly different characteristics to the corporate sector.



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