JLL: Global commercial real estate investment volumes at US $96 bln in Q3 2012
Thursday 25 October 2012
Global investor purchasing activity remained steady in Q3 2012, with US $96 billion (approx. 73.8 billion) transacted over the quarter, according to Jones Lang LaSalle capital markets research from 60 countries.
Conclusions of the research are:
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 $126 bln (approx. 97 billion) recorded in both years; Asia Pacific is at $68 bln (approx. 52.3 billion) in 2012, compared to $71 bln (approx. 54.6 billion) a year ago, whilst in EMEA YTD volumes are 75 bln (approx. 57.6 billion) compared to 85 bln (approx. 65.3 billion) 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 $400 bln (approx. 307 billion) with busy Q4 predicted in all regions.
Despite a slight fall on the US $106 bln (approx. 81.5 billion) 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.
Arthur de Haast, Head of the International Capital Group at Jones Lang LaSalle said: Whilst general sentiment continues to be constrained by the economic environment, transaction volumes have been robust overall for the last quarter due to high levels of interest in offices, retail and industrial real estate in major global markets. Investors have been placing capital in the major cities in these safer markets.
"These larger markets have more liquidity and lower risks and whilst returns might not be as attractive as emerging markets such as Brazil, India and China, these economies have slowed and market transparency is lower.
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.
Arthur de Haast 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.