Direct real estate investment volumes across the globe reached US$69 billion in the third quarter, indicating that investment recovery in the last four quarters has levelled off, according to new research released by global real estate services firm Jones Lang LaSalle (JLL).
Meanwhile, direct commercial property investment volumes reached US$202 billion in the first three quarters of 2010 compared to US$139 billion transacted over the same period last year.
“A significant weight of equity capital is targeting prime assets across all sectors, but a scarcity of prime product for sale is constraining investment volumes. Product shortages are also resulting in yield compression and substantial rises in prime capital values across many of the world’s leading office markets, from London to Washington, DC to Shanghai,” said Arthur de Haast, head of the International Capital Group (ICG) at JLL.
“For the full year, we now expect global direct real estate volumes to reach US$280 to 290 billion, marginally below our original projection of US$300 billion, but nonetheless representing a 35 to 40 percent increase on 2009. Further growth in volumes is anticipated in 2011, with cash-rich investors widening their geographic search, pushing into value-added opportunities and eventually into secondary stock,” he said.
In the Asia-Pacific, Q3 investment volumes jumped 12 percent quarter-on-quarter to US$18 billion, with notable quarterly increases in countries like Singapore, Malaysia, China and Australia.
“The Asia Pacific investment market is benefiting from optimistic business sentiment, resurging investor confidence and strong economic fundamentals. We anticipate transaction volumes to show 15-25 percent growth on 2009, reaching the US$77 billion mark by year end,” said Stuart Crow, head of Capital Markets in Asia Pacific.
Alistair Meadows, head of ICG Asia Pacific also commented: “In addition to net positive in-flows to Asia Pacific there continues to be strong investor demand from Asia to selective European and US markets, with Asian investors exporting US$1.1 billion into the European market, particularly London in 1H 2010. Given the currency play favouring Asian investors into these markets, we see this export of capital continuing into 2011.”