A minimum of US$57.3 billion of capital is expected to be invested in global real estate during 2017. This represents a total average target allocation of 11.5% for investors – a gain of 1.5% from current allocations.

These results from the recent global investment intentions survey 2017, published by INREV, ANREV and PREA, underline a continuing strong appetite for real estate among institutional investors.

Overall, more than half of investors who responded to the survey plan to increase their global real estate allocations over the next two years. The greatest uplift was suggested by European investors – up from 9.4% currently to 11.5%. Investors from Asia Pacific are not far behind with intentions of increasing their target allocations to real estate from 8.4% to 10.4%; while North American investors are mostly on target with the aim of growing their real estate allocation from 11.3% to 12.1%.

Within Asia Pacific, the top three investment destinations continue to be Sydney, Melbourne and Tokyo. Tokyo slipped from first place in 2016 to third this year, being replaced by Sydney. For the second consecutive year, China Tier 1 cities (namely Shanghai, Beijing, Shenzhen and Guangzhou) are in fourth place. Hong Kong and Macau rank in eighth place.

The office market remains the preferred sector for investment, with 89.6% of respondents intending to invest in this sector, consistent with the past four years’ results.

Investors in the region again highlight their preference for core assets (39.7%), closely followed by value added (38.1%) and opportunity (22.2%) in line with 2016. By domicile, Asia Pacific investors (57.7%) favour core investments in comparison to Europeans who have a preference for value added, and North Americans who prefer opportunity investments.

A total of 76.3% of the respondents who invest in Asia Pacific are invested in non-listed real estate funds. Non-listed property funds remain the preferred route to increase real estate allocations for the majority of investors in the region (41.3%), followed by joint ventures and club deals at 33.7%.

“The strong performance of the Australian market, as recorded by the ANREV Australia index in the past year, as well as the overall level of transparency that the country provides, continues to attract investors from other regions. In particular, the main cities of Sydney and Melbourne remain attractive for investors given the amount of core stock available,” said Amélie Delaunay, ANREV’s director of research.