Global commercial real estate investment volumes decline by 8%, report



Global commercial real estate investment volumes at US$96bn in Q3 2012

Strong performance in major global property investment markets continues despite 8% total volume decline compared to same period in 2011 according to preliminary numbers from Jones Lang LaSalle.

  • Q3 2012 direct commercial investment volumes were 8% down compared to busy Q3 2011, with robust activity in the major markets offset by weakness in a number of smaller and emerging markets;
  • YTD volumes are similar to those recorded in the first nine months of 2011: Americas saw US$ 126bn recorded in both years; Asia Pacific is at US$68bn in 2012, compared to US$ 71bn a year ago, whilst in EMEA YTD volumes are €75bn compared to €85bn in 2011;
  • Strong sustained demand for stable major markets off-setting lower interest in more volatile emerging markets;
  • Sectors such as residential and student accommodation attracting more global investor appetite as investors seek diversification and returns;
  • Full year 2012 global forecast remains at US$ 400 bn with busy Q4 predicted in all regions.

Global investor purchasing activity remained steady in Q3 2012, with US$ 96 billion transacted over the quarter, according to Jones Lang LaSalle capital markets research from 60 countries.

Despite a slight fall on the US$ 106bn total recorded in Q2 2012, transaction levels have held up in the summer months of Q3. This is due to strong performance in established major markets in all three regions, such as the United States, UK, Germany and Australia.

Middle Eastern investors have continued their inter-regional purchasing activity during Q3 2012, taking advantage of opportunities to acquire prime, core assets in the world’s major cities.

The majority of this investment has been focused on Europe and the US, with only a small amount of deal flow focused on Asia Pacific. The most popular sectors have been offices, retail and hospitality although we have seen some interest in residential, student housing and other more niche real estate sectors. London and Florence have seen inward investment from the middle east in Q3 2012, with an office asset at 68 William Street in London and the Grand Hotel Baglioni changing hands.
Fadi Moussalli, Head of the Jones Lang LaSalle International Capital Group in the Middle East said: “Middle Eastern investors continue to benefit from surpluses generated by hydrocarbons export activity. Driven by the limited opportunities to acquire quality assets in their home markets and their desire for geographic diversification, Middle Eastern investors remain active overseas. The past few years have seen the growth of private investors in addition to the Sovereign Wealth Funds (SWF), with Middle Eastern Investors also become more active traders, being willing to sell non-core assets with several major disposals recorded during 2012.”

David Green-Morgan, Global Capital Markets Research Director said: “Whilst investors are still being cautious and deals take longer to complete, there is a reasonably solid outlook for the rest of 2012. Financing for real estate transactions shows signs of improving in the US with CMBS issuance set to surpass the levels seen in 2011 and debt levels are steadily coming down, demonstrating that refinancing activity is taking place. Government quantitative easing and central bank policy activity has also improved global liquidity and confidence.”

Fadi Moussalli, added: “Q4 is historically the busiest quarter of the year and that will be no different this year for real estate transactions. Whilst global investors might be watching the upcoming US presidential elections with interest, we expect this to have limited impact on activity as proved the case with the recent London Olympics. Looking further forward we expect volumes to increase in 2013 and one trend to watch is the continued activity in alternative sectors, where our teams are currently extremely busy.”


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