Improving global economic conditions and enhanced liquidity pushed Q4 2013 global commercial real estate investment volumes to US$183 billion says Jones Lang LaSalle (JLL), helping to drive full year volumes to US$549 billion – an 18 percent increase on 2012.
Real estate markets have maintained their growth momentum over the last 12 months despite an exceptionally busy end to 2012. In addition Q4 volumes exceeded a strong third quarter with growth of 31 percent, and recorded further growth of 13 percent compared to the same period last year.
Global commercial real estate investment volumes in Asia Pacific showed the largest regional growth at 26 percent, meaning volumes are back to the record peak levels of 2007 at US$124 billion. The resurgent Japanese market has been a major contributor to the growth in 2013, up 63 percent in terms of US$ (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 percent and Australia up 30 percent.
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 percent, whilst Q4 volumes were up 17 percent to US$87billion. The major markets of the US and Canada were both up 20 percent. The picture in the more volatile Latin American markets was mixed with Brazil having a notably subdued year.
European markets have seen some of the best results since 2007, recording growth of 14 percent overall in US$ terms, with full year volumes of US$184billion. The UK and Germany, two of the big three, have grown by 19 percent and 17 percent 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 forecast global commercial real estate investment volumes in 2014 will break the US$600 billion mark at US$625 billion, a further 14 percent year-on-year growth. The most significant growth is expected in the Americas with volumes expected to grow by a further 20 percent in 2014, with increasing economic growth, less political distractions and improving liquidity via the debt and equity markets. An exceptionally strong Q1 2014 is expected in Europe, which will support a 10 percent 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 percent growth in volumes in the region.
Arthur de Haast, Lead Director, International Capital Group at JLL, commented: “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.”
David Green-Morgan, Global Capital Markets Research Director at JLL, added: “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 percent increase on 2013.”