2022 Global Investor Outlook ReportGlobal Capital MarketsGlobal Capital is backGlobal capital is back as pandemic-related uncertainty and travel restrictions remain in flux.In 2021, real assets - across all property asset classes - played an increasingly prominent role in global investment strategies in a show of impressive resilience. Looking ahead, property will continue to demonstrate a strong investment trajectory amid less-than-ideal conditions, with investment volumes set to match the 5 year average. As investors race to deploy capital in 2022, they face an increasingly complex and competitive marketplace, buoyed by multiple growth opportunities in expanding economies and populations. New regulations and legislation - particularly regarding ESG will continue to shape the investment landscape and decision-making process.The key trends shaping global real estate investment markets in the year ahead include: Investing with intent. Social and environmental trends are a clear priority, increasingly woven into long-term investment strategies and performance targets. We expect environmental attributes and asset performance to drive market turnover as investors re-calibrate their assets under management. Three quarters of investors surveyed globally are taking action, with at least 25% in advanced planning stages on whether to hold or dispose assets. Social trends point to affordable housing as a significant growth opportunity globally when expertly managed.The race to core assets. As investors upgrade and future-proof their portfolios, the race to core will impact asset pricing. An estimated 1% of global office assets meet Net Zero standards, yet core-plus offices in major cities top the global strategy pick, with 60% of investors confirming this as preference. This investment-demand versus supply imbalance correlates with the consensus that core offices will increase in value up to, or more than 10% over the next 12 months. Current yield/cap rates for offices in many major cities price them at a discount to other asset types, making offices a compelling route to deploy capital at scale. Tier-1 global markets of London, New York, Tokyo, and Paris top the wish-list.How low can you go? As competition for core assets heat up, investors should not be surprised to be outbid. The recalibration of portfolios will also likely result in a wave of non-conforming assets coming to market creating an impetus for investors to dispose early before discounted prices take hold. Yet to be seen is how deeply prices will be discounted and how the cost of retro-fitting will accentuate a shift in pricing. Large bid-ask spreads is likely to diminish market activity short-term, but we expect markets to reconcile on pricing by 2023.Rising construction costs the primary market constraint. In addition to impacting cost and the ability to retro-fit, the constrained supply of materials and labour creates positive and negative impacts. On a negative note, it will delay production of new supply and product. On a more positive note, it will limit space availability just as occupier demand is expanding, strengthening core and core-plus asset values in particular. It will also accelerate modern methods of construction, adding an extra dimension to the race to create the new core and stimulate joint venture and M&A activity.Partnership is key to diversified portfolios. Investors are looking for more ways to fortify and diversify their portfolios, turning to specialised assets like data centres, life science facilities, affordable and student housing. The path to success for investors will come from effective joint ventures with partners that have operational knowledge, local expertise and skills in related sectors and assets.We look forward to extending partnerships with our clients throughout the year ahead, applying our knowledge and expertise to ensure the success of their strategies as the property investment landscape is redefined.2Colliers Global Capital Markets 2022 Investor Outlook ReportBackgroundHow do you manage and deploy capital?* 90.3%Direct31.2%Indirect29.9%Platform: Joint Venture22.8%Separate Accounts13.8%Platform: Mergers & AcquisitionsIn what regions is your company considering new investment in 2022?The second edition of our annual outlook for global property investors is again based on a focused survey undertaken by 300+ investors across the globe and in-depth interviews with our regional Capital Markets leaders. The findings and opinions featured in this report are shaped by their responses. *This chart represents how often each selection was chosen relative to total responses provided. For each selection, the % figure indicates the percentage of investors surveyed who chose this specific selection, whereby each investor could choose multiple answers.Investment ManagerOther (e.g. Developer)Listed Property Company (e.g. REIT)Institution (e.g. Pension Fund, Insurance Company, Sovereign Wealth Fund)Private EquityPrivate Investor / Family Office / Family TrustLender (e.g. Bank, Debt Fund)41.6%13.4%12.6%11.9%10.8%8.2%1.5%What is your company type?32%Americas33%EMEA35%APAC3Colliers Global Capital Markets 2022 Investor Outlook ReportGlobal View2022 Global Key Themes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02Asia Pacific Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Europe, Middle East, Africa Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23The Americas Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32Regional ViewsKey Takeaways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41RecommendationsContact Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Colliers ContactsWhats inside?Global Capital Markets 2022 Investor Outlook2022 Global Key ThemesReport Contributors2Across the globe, investors are bullish on economic growth prospects for 20222022 is likely to be a benchmark year for the industry as global capital activity increases and economies stabilise and expand. Investors are markedly positive on property market fundamentals, supporting high real estate allocations across the Americas, Asia Pacific (APAC), and Europe, the Middle East and Africa (EMEA). This demonstrates the continued allure of the asset class, enabling 2022 investment volumes to at least match those of 2021. There has been a rapid acceleration in the number of transactions closing in Q3, that is expected to continue well into 2022.“Global capital is back and 2022 should be turbocharged in terms of dry powder looking to act. Both domestically and cross border were going to see real growth of major transactions across all key sectors.”- Tony Horrell, Head of Global Capital Markets & CEO UK & Ireland3Colliers Global Capital Markets 2022 Investor Outlook Report+ + +_ _ _ _ _ _Global ChallengesPositive vs. NegativeEconomic GrowthRental GrowthRising InflationRising Construction CostsCOVID-19 Return to Workplace UncertaintyTravel RestrictionsThe rising cost of construction is the major global concern, cited by 80% of investors. This was ahead of city mobility and travel restrictions resulting from the COVID-19 pandemic, which featured as a major negative factor for 60% of investors. Given the strong appetite for development, and the growing need to retrofit and repurpose existing stock, rising construction costs are clearly weighing heavily on investors minds. However, tightening supply side conditions should reinforce existing values, particularly for core assets. Equally, existing bottlenecks should drive the acceleration of modern methods of construction as a means of bringing more sustainable, energy efficient and emission compliant product to market. While construction costs topped the list of concerns, rising rates of core inflation was viewed with more positivity. This reflects the ability of standing assets to act as an inflation hedge. That said, a strong number of investors were concerned that rising interest rates would impact the cost of debt. Government policy and regulations were also high on the list of concerns, covering a range of factors from local lockdown protocols to tax hikes.Rising construction costs, travel and mobility restrictions top the list of challenges. 4Colliers Global Capital Markets 2022 Investor Outlook ReportGrowing focus beyond financials: sustainability no longer a “nice to have”Environmental, Social and Governance (ESG) considerations, particularly environmental ones, are prominent on the investor agenda, with three quarters of investors integrating Environmental factors into their strategies. Some 21% are in the consideration stage, with only 4% considering it as not applicable to them. Investors are also largely unconvinced so far that ESG-compliant assets are likely to command a significant (i.e. over 5%) price premium, except in the office segment, where expectations are higher. Sentiment is clear that more progress is needed on standards and performance metrics for ESG integration to reach the next stage. “More explicit rules and standards are key to driving further ESG adoption, particularly among smaller investors, as the major institutional investors are already quite advanced when it comes to integration and reporting,” says Damian Harrington, Director, Head of Research for Global Capital Markets & EMEA. “But a lot more technical clarity is needed in terms of asset characteristics. That should come by mid-2022 in Europe which is at the sharp-end of this, but we expect global markets to become more aligned in due course. Clarity will give the markets more certainty in terms of the CAPEX required and impact on values, driving activity.” Does your ESG strategy alter by region?11%Yes89%NoSpecified Focus:Strong focusSome focusNo focusAPAC56%39%6%The Americas14%29%57%EMEA15%14%71%5Do you expect ESG compliant assets to achieve a value premium over the next three years in the following sectors?0%5%10%15%20%25%30%35%40%I do nt kno w No difference 0 t o 5 % 5 to 10% 10 to 15% 15 to 20% 20% +There are no clear guidelines determining what ESG compliant assets are or need to beThere is no effective benchmarking system in the markets in which I operate I dont think there is a need to categorise assets as ESG compliantOther I expect to see a discount on non-compliant ESG assetsIf you answered I dont know, please explain why:OfficeIndustrial & LogisticsMultifamily / BTRRetail Hotel28%25%11%17%20%6Colliers Global Capital Markets 2022 Investor Outlook ReportOnly a consideration, yet to decide on benchmarks to adopt to drive our ESG Governance43%Not applicable9%Only a consideration, yet to be integrated into investment decisions35%Not applicable10%A capital improvement, disposal and acquisition strategy is in place to meet environmental asset performance targets10%We always consider certifications such as WELL or Fitwell to benchmark and manage our assets17%ESG Governance benchmarks, disclosure and reporting in place48%All assets have been assessed in terms of their energy efficiency and emissions performance30%We are beginning to make measurements on this topic38%Currently being integrated, with new protocols & performance benchmarks established34%Only a consideration, yet to be integrated into business operations21%Not applicable4%Environmental FactorsAre you taking action on the environmental performance of your assets?Social FactorsTo what degree does the health and wellness profile of your assets factor into investment decisions?GovernanceHow well established is the Governance in your company, to manage and integrate E&S factors into your overall strategy?0 10 15 25 5 20 30 35 40 45 500 10 15 25 5 20 30 35 40 45 500 10 15 25 5 20 30 35 40 45 50Percentage (%)Percentage (%)Percentage (%)7Colliers Global Capital Markets 2022 Investor Outlook ReportAlternatives edge further into the mainstream In a low-yield environment, investor appetite for specialised assets such as data centres, social housing and life science facilities is set to rise as investors venture further in search of product and yield. Investors are bullish on these assets because of their connection to demographic and economic trends. However, activity is likely to be limited by the specialised knowledge and strategic alliances needed to invest successfully in these sectors, which also tend to cluster geographically around key nodes of expertise and infrastructure. Successfully deploying capital tends to be dependent on strong local partnerships, M&A activity or relationships with best-in-class operators. Big deals, platforms and local JVs in favour A major potential growth constraint to activity in 2022 is a lack of product, as theres still too much money chasing too few deals. This tends to favour consolidation, development and larger players, and there is a belief that M&A activity will expand in real estate as investors look to get scale quickly. Engaging with local expertise in specific sectors is also proving effective to source product and enhance returns, and the survey highlights that this strategy as a means to deploy capital is clearly on the rise. “We expect to see an increase in both capital consolidation and JV platform investment globally in 2022. The huge demand for AUM growth, means there will be an insatiable appetite for consolidation within the REIT and fund management market.”- Chris Pilgrim, Director, Global Capital Markets8Colliers Global Capital Markets 2022 Investor Outlook ReportIndustrial and Logistics (I&L) is the sector attracting the most investor attention overall, and the survey indicates the sector is competing with, or even outpacing, offices as the top target of investors in economic hubs such as New York, Tokyo, Amsterdam and Sydney.Industrial and logistics shines Appetite for this asset class is intimately connected to the ongoing digitalisation of consumption, and increasingly the best-shoring of global supply chains. This means there are ample opportunities in the sector despite concerns about capital overcrowding, although too much capital appears to be oriented towards last-mile. “The UK is ahead of the curve as a market in terms of its e-commerce penetration, which means theres a huge amount of growth thats still coming across global locations. A lot of it is going to be related to how logistics rebalances with retail, and the extent to which retail assets are going to be used for fulfilment.“- Damian Harrington, Director, Head of Research, Global Capital Markets & EMEA9Colliers Global Capital Markets 2022 Investor Outlook ReportOffice sector retai