Inter-regional direct commercial real estate investment up 70% according to 1Q 2011 Global Capital Flows report
Cross-border direct commercial real estate investment volumes reached USD 37 billion in 1Q 2011, up 25% from a year ago, according to the recent Global Capital Flows report from Jones Lang LaSalle. Inter-regional volumes (capital moving between the Americas, EMEA and Asia-Pacific) rose to USD 26 billion, a 70% increase over 1Q 2010. This emphasises the appetite real estate investors have for acquiring foreign assets and far exceeds the 40 % gain across the total market (cross border plus domestic investment) in the first quarter.
The most active cross-border purchasers in 1Q were the global funds, Canada, Singapore and Germany. Meanwhile, the Americas region was the largest net beneficiary in terms of inter-regional capital inflows, at USD 2.6 billion, followed by EMEA with an inflow of USD 2.2 billion. Asia-Pacific experienced a net outflow of USD 3.3 billion in the quarter, highlighting the importance of both private and institutional capital coming from that region’s high growth economies.
Of the top 10 city markets in 1Q claiming the highest investment action, five were in in Asia Pacific including Tokyo, Singapore, Hong Kong, Seoul and Shanghai; three in the Americas, New York, Washington DC and Los Angeles; and two in EMEA, London and Manchester. Manchester benefitted from a single large retail transaction, boosting it into the top ten, whilst London remained the global focus for cross border investors from Asia Pacific and the Middle East.
Paul Guest, Director of Global Capital Markets Research comments: “Looking ahead, Tokyo’s market will unavoidably be affected by March’s natural disasters. Investors are requesting updated engineering reports and this will delay some acquisitions, though domestic and global investors tell us they are committed to the market medium term. London remains a focus for many cross-border investors, while the re-kindling of activity in the United States will push its markets back up the top ten over the course of 2011. Do not underestimate the large emerging markets not already in the top 10; watch Bangkok, Beijing, Moscow, São Paulo and Warsaw.”
Globally the retail sector’s share of total volumes rose in 1Q to nearly a third of all transactions, from a quarter of all transactions in 2010. While the office sector’s total share slipped to 45% from nearly half of all volumes in 2010.
Global Capital Flows is a free-to-air analytical tool, providing a set of data designed to understand how commercial real estate capital is moving around the world. The quarterly report can be found on an interactive website which also acts as a portal for clients to access Jones Lang LaSalle’s global capital markets research. Further information can be found at www.joneslanglasallesites.com/gcf/
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