Global real estate investment surges by more than 50%
GLOBAL - Global real estate investment activity recovered to pre-crisis levels at the end of last year, and Europe and the US have seen the strongest rebounds, according to the latest figures.
Jones Lang LaSalle (JLL) found that global transaction volumes reached $316bn (€234bn) in 2010, more than doubling the levels seen last year.
JLL's Global Capital Flows data analysis shows that, after reaching a low of $209bn for the whole of 2009, global volumes were bolstered by an active first half of 2010 in key markets and then a more general surge in fourth quarter.
Activity in Q4 2010 marked the first time global volumes exceeded $100bn since the onset of the global financial crisis in 2007.
Arthur de Haast, head of JLL's International Capital Group, said: "At the beginning of 2010, we predicted total global volumes to land near $300bn, and the fourth quarter surpassed our estimates.
"Barring further sovereign debt crises or financial shocks, the momentum of 2010 is expected to continue over the next 12 months, and we predict global volumes for 2011 should increase by 20-25%."
JLL data shows the Americas and Europe experienced the greatest decline in total volumes in 2008 and 2009 and since then have shown the strongest rebound.
The Europe, Middle East and Africa (EMEA) region recorded the highest overall volumes in 2010, with full-year volumes reaching €102bn, up by nearly 40% on 2009.
Fourth-quarter volumes hit $49bn, marking the highest level since the first quarter of 2008 by a significant margin.
Europe's largest markets - the UK, Germany and France - made up more than half of the region's direct commercial real estate volumes, confirming the global trend of investor appetite for core products in mature and transparent markets.
Volumes in the UK, Europe's largest market, were up year-on-year by nearly 46% in 2010 to $49bn.
Richard Bloxam, director of JLL's EMEA Capital Markets group, said: "In Europe, the Nordics, CEE countries and Germany have seen the greatest increases in activity over the year.
"The restricted supply of core assets in Europe's major markets is driving investment demand to other cities and geographies. Additionally, we are witnessing an increasing appetite from investors to step into core investments at an earlier stage of development."
Latest figures from CB Richard Ellis estimated that Europe saw €35.8bn of investment activity in the fourth quarter of 2010, up 27% on the same period last year and by far the highest quarterly total since Q1 2008.
Two factors were identified by CBRE in driving this growth, including the steady flow of large transactions, such as the €1bn-plus Stratford City shopping centre sale in the UK, the Opernturm office deal in Germany and the €475m sale of mixed-use asset Klara Zenit in Sweden.
The other factor, which CBRE said was more important, was the "aggressive bidding" by investors in core real estate markets.
Jonathan Hull, head of EMEA capital markets at CBRE, said: "Aggressive bidding for prime assets became something of a market norm in 2010, intensifying even further toward the year's end.
"While demand increased through last year, it remained highly focused on core assets and markets. With available product unable to meet this demand, it presents a supply problem, and it is difficult to see this changing in the short term."
He added: "Some investors are starting to look into the next notch up the risk curve - but still very much concentrating on the core markets. An exception to this is Spain, where higher yields are attracting core investors, even once the sovereign debt risk and weak economic performance are taken into account."
Meanwhile, UK-based Property Data has found that commercial real estate volumes in the UK rose by 44% in 2010, driven by demand from pension funds and other institutional investors.
The company found that transactions climbed to £36.4bn (€43.1bn), up from £25.2bn in 2009.