Interest Rate Cut Might Bring More ‘Interested’ Investors
A word about interest rate cuts have investors buzzing about coming back to the US, according to Real Estate Weekly. So far, global commercial real estate investment-this included entity-level deals-totaled about $231 billion in the second quarter, with value up from 17% from the previous quarter. It remained down by 7.5% when compared to the second quarter of 2018.
The Americas, EMEA and APAC markets have been tracked and reports have already come in. It showed a rebound in investments from Q1 but also a drop in H1 activity when compared to the same period last year. This is due to fewer transactions of the ultra-large variety, as well as a lack of quality assets that are up for sale.
CBRE did report that there is a strong leasing activity which underpinned renewed investor demand for office assets in the industrial and hotel sector. There is also a flurry of activity in the multifamily sector, which remained one of the most active US markets. Richard Barkham, CBRE's Global Chief Economist, echoed these sentiments.
Interest rate cuts are happening all over the world, but that doesn't mean investors might get more interested. In India, Thailand, and New Zealand, their respective central banks are mulling over these cuts. According to The New York Times, an analyst called these actions "defensive" in light of the situation between the US and China.
The monetary authorities of these countries have cut interest rates in reaction to China's policy of purposely weakening the renminbi. This creates a wave that shook currency markets and had the outspoken US President Donald Trump lashing out against Beijing once again. He called the Chinese government a "currency manipulator."
The action may have also been forced by the Trump government. Weakening the RMB allowed it to steady after crossing a critical threshold. The world markets are still bracing, however, as stocks on Wall Street continued to fall at the open by 1.5% before recovering. Rate cuts have shown that the countries of the world are anticipating hard times for the weeks and months ahead.
Investment activity has begun to pick up once again in parts of Europe, a sign that things might be moving positively, contrary to reports. The lack of quality products on the market does dampen the hopes that the economy is on its way to improving. For this, CBRE maintained its usual global CRE investment outlook for the year, with a single-digit drop in percentage points the expectation.