Invesco predicts $200bn commercial property investment over next five years

Invesco Real Estate has predicted that more than $200 billion (£134 billion) could be invested in mature commercial property markets worldwide over the next five years.

Speaking at Investment Property Databank's (IPD) Multinational Investment conference in central London, Invesco Real Estate's director of European research Simon Mallinson said the company had estimated the "conservative" figure of $200 billion in unleveraged capital investment as a "starting point for us to work out the impact of such a scale of fresh capital hitting the market chasing product, which will create varying supply and demand issues across world markets".

Mr Mallinson added that while sovereign wealth funds have the greatest appetite for commercial property investment over the short-term and feature in the estimate, they are starting from a low base of real estate exposure and are still developing strategies and looking to make large capital placements, which could mean their investment timeframe is extended to account for market opportunities.

IPD also noted that speakers at the conference had been asked about the impact of European government austerity packages on real estate markets.

Nassos Manginas, European business development director at IPD, suggested the sector is now in a period of increased focus on the "income side of the equation", with more importance placed on stable cash flows, underpinned by "strong covenant strength tenancies".

Last week, the CB Richard Ellis Monthly Index showed that capital growth in the UK's commercial property sector reached 0.6 per cent in June 2010, taking the year-to-date increase in property values to 6.8 per cent.