Global commercial real estate (CRE) investment had a very good year in 2013, according to end-of-year reports from Jones Lang LaSalle. Total CRE investment soared 18% for the year thanks to an impressive fourth quarter that made 2013 the best year since 2007. Momentum stayed positive for the entire year and analysts predict CRE volume to exceed $600 billion in 2014. Activity in many countries contributed to last year’s growth, particularly in Japan’s resurgent market and booming investment levels in China and Australia. For more on this continue reading the following article from Property Wire.
Full year 2013 global commercial real estate investment volumes were up 18%, with 2014 set to exceed US$600 billion, according to the latest analysis from Jones Lang LaSalle.
The firm says that following five years of strong market growth global investment volumes for the fourth quarter of last year and indeed the full year have reached their highest levels since 2007.
Improving global economic conditions and enhanced liquidity pushed fourth quarter global commercial real estate investment volumes to US$183 billion, helping to drive full year volumes to US$549 billion.
The report says that real estate markets have maintained their growth momentum over the last 12 months despite an exceptionally busy end to 2012. In addition fourth quarter volumes exceeded a strong third quarter with growth of 31%, and recorded further growth of 13% compared to the same period last year.
Global commercial real estate investment volumes in Asia Pacific showed the largest regional growth at 26%, meaning volumes are back to the record peak levels of 2007 at US$124 billion.
The firm says that the resurgent Japanese market has been a major contributor to the growth in 2013, up 63% in terms of US$, with volumes doubling in local currency terms, re-establishing it as the third most active market globally after the US and UK. Investment volumes grew to reach record levels in both China up 66% and Australia up 30%.
The Americas has seen continued improvements in market conditions and confidence, despite economic and political challenges during the year. Full year volumes across the region reached US$240billion, up 18%, whilst fourth quarter volumes were up 17% to US$87billion. The major markets of the US and Canada were both up 20%. However, the report points out that the picture in the more volatile Latin American markets was mixed with Brazil having a notably subdued year.
European markets have seen some of the best results since 2007, recording growth of 14% overall in US$ terms, with full year volumes of US$184billion. The UK and Germany, two of the big three, have grown by 19% and 17% respectively. At the same time, there has been much greater activity throughout the smaller European investment markets and also across the real estate sectors.
Jones Lang LaSalle forecasts that global commercial real estate investment volumes in 2014 will break the US$600 billion mark at US$625 billion, a further 14% year on year growth. The most significant growth is expected in the Americas with volumes expected to grow by a further 20% in 2014, with increasing economic growth, less political distractions and improving liquidity via the debt and equity markets.
An exceptionally strong first quarter in 2014 is expected in Europe which will support a 10% year-on-year growth in 2014 due to a broadening of activity across geographies and sectors supported by the continued weight of capital into the sector and improving confidence.
Asia Pacific markets are expected to maintain their momentum into 2014, given the improving global economic recovery and solid demand from domestic investors, supporting an overall forecast of 10% growth in volumes in the region.
‘The global real estate capital markets continue to improve on the back of more optimistic global economic forecasts and investor sentiment. Real estate is certainly benefiting from the desire of investors to hold hard income producing assets, alongside and in some instances in preference to more liquid investment opportunities,’ said Arthur de Haast, lead director, International Capital Group at JLL.
‘The desire of experienced investors to look at opportunities which require additional asset management or more creative solutions has helped push 2013 volumes past our initial expectations. With this trend expected to continue into 2014, we are confident that investment volumes will continue to grow,’ he added.
According to David Green-Morgan, global capital markets research director at JLL, while overall global capital flows remain well below their peak levels with little growth over the last few years, real estate continues to see an increase in capital flows between countries and regions.
‘Investors are looking outside their home markets in increasing numbers for opportunities and this trend is unlikely to reverse in the short to medium term. JLL have recorded double digit growth in transactional volumes in three out of the last four years, and we expect this trend to continue in 2014 with volumes exceeding the US$600 billion mark, a 14% increase on 2013,’ he explained.
This article was republished with permission from Property Wire.