Investors Target U.S. Commercial Properties After Drop in Values, DTZ Says

Commercial-property investors are preparing to spend more in the U.S. next year after more than two years of declining values, DTZ Group Plc said.

Funds and investment companies increased the capital available for deals in the Americas by 54 percent since December to $97 billion, the London-based real-estate broker said in a report today. Most of this will be used for U.S. transactions.

Gains in the U.S. and the Asia-Pacific region lifted the total amount that may be invested in real estate worldwide by 22 percent to $281 billion, DTZ estimates. The third quarter was the most active in two years for U.S. sales, according to New York-based Real Capital Analytics Inc., which expects the country’s share of global property deals to double from last year’s 11.6 percent.

“The U.S. is seen as the most attractive market globally,” said Nigel Almond, the associate director of forecasting and strategy research who wrote DTZ’s report.

About $71 billion is available in the Asia-Pacific region, 29 percent more than in December, DTZ estimates. In Europe, the amount of capital that could be used for transactions is unchanged at $112 billion.

U.S. investments generated a return of 3.3 percent from rental income during the second quarter and the first gains in property values in two years, according to the Chicago-based National Council of Real Estate Investment Fiduciaries.

DTZ’s Almond said the increased amount of money earmarked for real estate reflects how companies “have taken advantage of the access to capital markets to place them in a better position to target new opportunities.”

Share Sales

U.S. real estate investment trusts raised $21.2 billion through secondary share sales last year to pay dividends and reduce debt, according to the National Association of REITs. In the first nine months, companies including BioMed Realty Trust Inc., Duke Realty Corp. and UDR Inc. tapped the equity markets again to raise about $12 billion for acquisitions.

Lower returns from fixed-income securities and equities are persuading investors like Allianz SE, Europe’s biggest insurer, to earmark more money to real estate. The Munich-based company said last week that it has about 10 billion euros ($14 billion) available to invest, some of which will go into the U.S.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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