Global real estate investments to top $600bn
New York, January 15, 2014
The global commercial real estate investment volumes are poised to grow 14 per cent year-on-year to break the $600 billion mark in 2014 following five years of robust market growth, said a report.
Improving global economic conditions and enhanced liquidity pushed investment volumes in the fourth quarter 2013 to $183 billion thus helping to drive full year volumes to $549 billion, up18 per cent over 2012, according to the latest review by property expert Jones Lang LaSalle (JLL).
JLL pointed out that this year the global commercial real estate investment volumes would surge to hit $625 billion, thus posting a further 14 per cent year-on-year growth.
The most significant growth is expected in the Americas with volumes expected to grow by a further 20 per cent in 2014, with increasing economic growth, less political distractions and improving liquidity via the debt and equity markets, said the expert.
JLL expects an exceptionally strong first quarter in Europe which will support a 10 per cent 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.
The property expert pointed out that following five years of strong market growth the global investment volumes for the fourth quarter and the whole of 2013 have reached their highest levels since 2007.
The real estate markets have maintained their growth momentum over the last 12 months despite an exceptionally busy end to 2012. In addition the fourth quarter volumes exceeded a strong third quarter with growth of 31 per cent, and recorded further growth of 13 per cent compared to the same period last year.
On the growth trends, Arthur de Haast, the lead director, International Capital Group at JLL, said: "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."
"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 JLL, the global commercial real estate investment volumes in Asia Pacific showed the largest regional growth at 26 per cent, meaning volumes are back to the record peak levels of 2007 at $124 billion.
The resurgent Japanese market has been a major contributor to the growth in 2013, up 63 per cent in terms of dollars (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 per cent and Australia up 30 per cent.
The Americas has seen continued improvements in market conditions and confidence, despite economic and political challenges during the year, said the expert in its report .
Full year volumes across the region reached $240 billion, up 18 per cent, whilst the fourth quarter volumes rose 17 per cent to hit $87 billion. The major markets of the US and Canada were both up 20 per cent. The picture in the more volatile Latin American markets was mixed with Brazil having a notably subdued year, it added.
JLL pointed out that the European markets have seen some of the best results since 2007, recording growth of 14 per cent overall in dollar terms, with full year volumes of $184 billion.
The UK and Germany, two of the big three, have grown by 19 per cent and 17 per cent respectively. At the same time, there has been much greater activity throughout the smaller European investment markets and also across the real estate sectors.
Fadi Moussalli, the head of International Capital Group (Middle East) said during 2013, the Middle Eastern investors were a significant contributor to the global cross border capital flows and were ranked third behind the US and Asian Investors.
"Transaction volumes of hotels acquired globally by Middle Eastern Sovereign Wealth Funds and Ultra High Net Worth Individuals picked up in 2013 and we expect hospitality assets to remain a very appealing asset class," stated Moussalli.
"Uncertainty due to an instable political context and desire to diversify sources of income outside of home markets will continue to be the main driver behind increased volume of transactions. Lastly, healthy fiscal surpluses resulting from exports of Oil, allowed the GCC governments to increase their direct overseas investment activity via their Sovereign Wealth Funds," he added.
David Green-Morgan, the global capital markets research director at JLL, said: "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 opportunitiesand 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," he added.-TradeArabia News Service