Close to 80% of real estate investors and managers expect the volume of equity capital investment in real estate to increase in 2015, said a survey, Emerging Trends in Real Estate 2015, by PricewaterhouseCoopers and the Urban Land Institute, released Wednesday.
For the first seven months of this year, commercial real estate transactions totaled $215.8 billion, up 17.3% from the same period in 2013, according to Real Capital Analytics data quoted in the report. Fifty-five percent of investors indicated there will be an oversupply of capital to invest in real estate in 2015, up from 54% in last year's survey. Thirty-three percent stated the equity capital was in balance, up from 27% last year, and 12% stated there was undersupply, down from 19% last year.
Meanwhile, 41.4% of U.S. respondents expect underwriting standards — the process of assessing the attractiveness of a real estate investment — for U.S. properties will be less rigorous in 2015, up from 30.7% in last year's survey. Some 47.5% stated that underwriting standards will remain the same, down from 50.8%, and 11.1% indicated underwriting will be more rigorous, down from 18.5%.
Respondents to the survey indicated that 2015 will be a year when it would be better to be a seller than a buyer of real estate.
Over the next 12 months, major markets including New York, Boston and Washington will attract the largest amount of capital, with more than $154 billion invested in those cities, according to the survey. Secondary markets such as Dallas, Houston, Atlanta and Seattle will attract about $140 billion. However, the most growth will come from tertiary cities, which are all the cities not included in the other two categories, attracting $80 billion, up 72% from the previous 12-month period.