ME investors boost global property markets
Dubai, July 9, 2013
The global commercial real estate markets have witnessed solid growth this year with a 11 per cent jump in transaction volumes during the first half, thanks to a key role played by the Middle Eastern investors, said a report.
The direct commercial real estate investment volumes in second quarter reached $114 billion globally, up four per cent over last year and up nine per cent over last quarter, according to leading property expert Jones Lang LaSalle (JLL).
The continued strong growth in second quarter has kept global volumes above $100 billion for five consecutive quarters, evidencing increasing investor confidence in commercial real estate, despite volatility in equity and bond markets, JLL stated in its capital markets research.
According to JLL, the Middle Eastern investors continued to play an active part in investment markets globally with transactions in many of the world’s largest cities, demonstrating their ability to deploy large amounts of capital for the right opportunities.
The Americas saw a 39 per cent rise in transaction volumes in second quarter compared to first quarter 2013, reaching $52 billion (up 11 per cent year-on-year); the first half totalled $90 billion, equating to a nine per cent increase over the same time last year.
The quarterly volumes in Mexico and Canada rose significantly to keep pace with the continued acceleration in the US market which grew by 19 per cent year on year in second quarter 2013, said the property expert.
Asia Pacific and EMEA both recorded strong growth over the half year with 11 per cent and 12 per cent year-on-year increases in volumes respectively.
The quarterly volumes in Asia Pacific remained flat both quarter on quarter and year on year, quarterly volumes in EMEA were flat year on year but down 13 per cent quarter on quarter following a buoyant start to 2013.
The largest global markets continued to see growth over the first half of the year with Japan (over 50 per cent), Australia (over 10 per cent), UK (over 4 per cent), Germany (over 43 per cent), France (over 6 per cent) all recording half year increases compared to the first half of 2012.
Only China saw transaction volumes fall 20 per cent in the first half, however a stronger performance is expected in the second half of the year as deals already in progress complete.
JLL’s forecasts for the remainder of 2013 remain at between $450-500 billion. "With global volumes up 11 per cent on this time last year and the second half of the year traditionally busier than the first, the global investment market is on track to surpass last year’s volumes, the expert added.
Arthur de Haast, the lead director, International Capital Group at JLL said: "Over the past two to three years, we have predicted that more capital would be allocated to direct investment in core property assets; this is now materialising. Institutional, private equity and high net worth individual investors are now consistently bidding on opportunities around the world."
"In addition to this, investors are starting to diversify their portfolios, both in terms of risk and geography, looking for more value-added and secondary opportunities; a trend we expect to continue over the short to medium term, he added.
David Green-Morgan, the global capital markets research director at JLL said, "The volatility we have seen in equity and bond markets over the last quarter has further added to the attraction of commercial property as an asset class. So far, the rising cost of global real estate debt has had little effect on transaction volumes with most deals funded on modest loan to value ratios."
"Unless there is a substantial rise in the cost of debt, it is only likely to have a marginal impact on transactional volumes for the remainder of 2013," he added.
Fadi Moussalli, the head of the International Capital Group in the Middle East said: "With inflows from relatively high oil prices continuing to provide a consistent source of capital the opportunities provided by commercial real estate are very attractive for investors from the Middle East at the moment."
"We continue to see capital move from the Middle East to Europe and the United States in particular. Whenever good, quality core assets are on the market investors are attracted by the consistent income flow and possibility of longer term capital growth," he added.-TradeArabia News Service