Q2 global real estate investment doubles to $66bln

In Asia Pacific there was 39% increase in investment volumes in the first 6 months of this year.

New research from Jones Lang LaSalle’s global capital markets experts has found that preliminary global direct commercial real estate investment volumes reached US$66 billion in the second quarter of 2010. While this level is similar to the first quarter 2010, it nearly doubles the levels of the market bottom one year ago. For the first half of 2010 global direct commercial real estate investment volumes totalled US$130 billion, with the Asia Pacific region seeing a strong increase of 39% over the same period last year.

Arthur de Haast, Head of the International Capital Group (ICG) at Jones Lang LaSalle commented: “This is solid progress for commercial real estate investment markets, reflecting the pick up in trading which we have witnessed in certain countries globally. That said, volumes are still well below pre-credit crisis levels, and since third quarter 2009 incremental growth has been relatively modest.”

He continued: “For the full year we anticipate volumes globally of around US$300 billion, which represents a healthy 40 to 50% increase on 2009. This is still less than half the pre-credit crisis levels of 2006 and 2007, but we must take into account the fact that those were heady years for commercial real estate investment, with unprecedented record trading volumes.”

Asia Pacific has recorded over US$15 billion in investment volumes this quarter, an increase of 21% over the second quarter of last year. However when compared to the first quarter results for the year, second quarter volumes have fallen by 34% in the region. Increases were recorded in Hong Kong and Taiwan with falls registered in Japan, China and Australia, according to a Jones Lang La Salle report.

Stuart Crow, Head of the firm’s Asia Capital Markets Group commented: “In Asia Pacific, the first half of 2010 has posted reasonably strong increases over the corresponding period in 2009. If this trend continues, aggregate volumes could be around 30% higher this year to reach the mid US$80 billon range.”

“Lighter transaction volumes are not unusual in a period of recovery as the bid / ask spread between buyers and sellers creates a mismatch of expectations. We are currently taking to market large office and retail assets in Vietnam, Melbourne, Brisbane, Singapore, Tokyo and Hong Kong via structured public campaigns – and in nearly all cases the number of bidders and the pricing has exceeded our expectations, signifying market fundamentals are still strong,” added Mr Crow.

In Europe, Middle East and Africa (EMEA) the second quarter has seen a modest 15% increase in volumes on Q1 to €23 billion, which is up 80% on a year ago (in euro terms). In US dollar terms, volumes totalled US$29 billion, up 5% on the quarter and 70% over 2009. The UK accounts for over 40% of EMEA volumes, while London maintains its position as the world’s most active market with volumes close to US$5 billion, though investors are increasingly focusing on France, Germany, the Nordics and Poland. In EMEA, Jones Lang LaSalle expect investment volumes will be 35% higher in 2010 compared to 2009, reaching the €100 billion (around US$130 billion) mark at year-end.

The Americas have seen a sharp uplift in volumes in Q2, but from a low base. Volumes have risen by 54% to U$US 21 billion on Q1 and are more than quadruple the $5 billion level of Q2 2009. Quarter over quarter growth in Canada and Brazil outstripped the United States.

In the meantime, investor demand also continues to be strong for core assets in the United States, but the lack of product supply continues to hinder direct investment volumes. It is expected that total transaction volume in the Americas region for the full-year 2010 will increase by at least 80% over 2009 and reach the US$80 to 85 billion range.