2016 Market Concerns You Need to Know. Markets become volatile when investors harbor deep concerns about near-term trends and asset valuations. So far in 2016, concerns abound, including:
• China’s slowdown and its implication on global growth
• The depth and pace of the oil collapse
• U.S domestic concerns driven by the Fed, a slowdown in manufacturing and apprehension that the recovery cycle is nearing its end
• Widespread geopolitical unrest, particularly in Europe
• Hyper-connectivity across market, amplifying the potential for swings
All of this is posing as a challenge for many investors, leading to uncertainty on how to best proceed and resulting in feelings of apprehension.
However, despite the uncertainty, investors are cautiously optimistic, with the majority planning on staying the course. In fact 82% of global investors surveyed in CBRE’s Global Investors Intentions Survey said they were going to invest the same or more globally in 2016 compared to 2015. Additionally, the report found that more than $1.1 trillion of global capital will target real estate investments in 2016, which represents a significant increase over 2015 investments at $876 billion. Chris Brett, CBRE’s Head of International Investment in the UK, notes, “Despite investor concerns about the global economy, we see increasing amounts of capital moving globally in 2016 and beyond into commercial real estate.” Yet, the trepidation is causing investors to protect themselves, looking towards safe havens such as the U.S. According to research, 65% of investors are expecting to buy more assets in the Americas than they bought last year.
KEEP CALM, CHECK YOUR ASSUMPTIONS, AND CARRY ON
Regardless of swings in global markets, those willing to maintain a thoughtful, long-term approach coupled with superior execution will be positioned for success. Peter Senst, President of CBRE Capital Markets in Canada affirms this reality, “Protect yourself from volatility. Embrace quality assets with quality rent rolls in quality locations. This is the time to make sure your balance sheet is fortified.” Spencer Levy, CBRE’s Americas Head of Research, adds that in volatile times investors are often tempted to move in packs by asset type and market, which can represent a risk factor given the hyper-connectivity of today’s landscape. But Levy notes that those willing to break out will have an opportunity to thrive.