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First-time quarterly real estate transaction volumes eclipse $100 billion since onset of global financial crisis
LONDON, CHICAGO, SINGAPORE, 20 January 2011 - Jones Lang LaSalle’s global capital markets experts today announced that a strong fourth quarter brought full year global transaction volumes to US$316 billion, which is more than 50 percent higher than 2009 levels representing a significant recovery in investment activity across all three major regions.
According to Jones Lang LaSalle’s proprietary Global Capital Flows data analysis, after reaching a low of US$209 billion for the full year 2009, global direct commercial real estate volumes were bolstered by an active first half of the year in key markets and a general surge in fourth quarter investment activity. Activity in the fourth quarter 2010 activity marks the first time global investment volumes have exceeded US$100 billion since the onset of the global financial crisis in 2007.
“At the beginning of 2010, we predicted total global volumes to land near US$300 billion, and the fourth quarter surpassed our estimates,” said Arthur de Haast, head of the firm’s International Capital Group. “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 to 25 percent.”
2010 Regional Transaction Volumes
Direct investment volumes around the globe marked an encouraging recovery in 2010. The Americas and Europe, having experienced the greatest decline in total volumes in 2008 and 2009, have shown the strongest rebound.
“Of the developing markets, China and Brazil volumes were bolstered by a surge of activity in the fourth quarter as volumes in both countries hit record levels,” added de Haast. “The United States, the Nordics and Germany also experienced healthy growth in the final quarter compared to a year ago.”
In Asia Pacific, full year 2010 volumes amounted to US$83 billion, up 25 percent from 2009. A number of major markets saw significant growth in volumes including Singapore (+219% y-o-y), Australia (+77% y-o-y), China (+41% y-o-y) and Hong Kong (+28% y-o-y). Investment volumes in the fourth quarter 2010 rose quarter to quarter by 17 percent to US$23 billion and were up by 24 percent over the fourth quarter 2009.
Stuart Crow, Head of Asia Pacific capital markets commented: “The pick up in investment activity reflects improving market fundamentals across the region and acceleration of rental growth in many markets. While Japan continued to see the biggest overall investment volumes in 2010, China outperformed in the fourth quarter and achieved 2010 volumes equal to two-thirds of those of Japan on the back of robust economic growth.”
Full year 2010 volumes in the Americas more than doubled from US$45 billion in 2009 to US$97 billion in 2010 and recorded the greatest increase in volumes of all three regions. Investment activity peaked in the fourth quarter 2010 at US$38 billion, reaching the highest transaction level since the first quarter 2008 and representing an 150 percent increase over the fourth quarter 2009.
“With increased quality and availability of product, Brazil transactions more than tripled to reach a new record US$3.4 billion of investment transactions in the fourth quarter 2010,” said Steve Collins, managing director, Americas of Jones Lang LaSalle’s International Capital Group. “However, the Americas’ recovery has mainly been underpinned by investor interest in core gateway cities like New York, Washington DC, San Francisco and Rio de Janeiro. As competition is driving the yields down in these core markets, investors are now extending their interest to other primary markets outside of the coasts in each region.”
In the Europe, Middle East and Africa (EMEA) region, which recorded the highest overall volumes of the three regions in 2010, full year volumes reached €102 billion (US$136 billion), up by nearly 40 percent on a year ago (in US$ terms). Fourth quarter volumes hit US$49 billion marking the highest level since the first quarter of 2008 (US$60 billion) by a significant margin.
Europe’s largest markets, the UK, Germany and France made up over half of the region’s direct commercial real estate volumes confirming the global trend of investor appetite for core product in mature and transparent markets, though there is clear evidence of investors being prepared to look further afield.
“In Europe, the Nordics, CEE countries and Germany have seen the greatest increases in activity over the year,” said Richard Bloxam, director of Jones Lang LaSalle’s EMEA Capital Markets group. “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.”
In Europe’s largest market, the UK, volumes were up year-on-year by nearly 46 percent in 2010 to US$49 billion. Buyers, particularly oversees investors, continue to target London which is seen as a safe haven from economic and financial uncertainties elsewhere, thanks to the transparency and liquidity of the market.
Global Capital Markets Outlook
For the full year 2011, Jones Lang LaSalle expects EMEA volumes to exceed €110 billion (US$150 billion), up a further 10 to 15 percent over 2010 levels. Asia Pacific volumes for 2011 are estimated to land at US$95 billion, a 15 percent increase on 2010, whilst the Americas 2011 volumes are expected to reach US$135 billion, a 40 percent increase over 2010 levels. If the regions perform as expected that would mean total global volumes in 2011 will be up 20 to 25 percent on 2010.
Notes to Editors
1) Entity-level transactions, development projects and multi-family residential investment are excluded from our provisional data and may change2) Jones Lang LaSalle converts transaction values into USD at the average daily rate for the quarter in which the transaction occurred. In other words, the foreign exchange effect has not been removed.3) Cross-border investment is where purchaser, vendor or both originate from outside the country in which the asset is located.4) Cross-border investment is classified as ‘intra-regional’ investment (both purchaser and vendor originate from the region where the asset is located) and ‘inter-regional’ investment (purchase, vendor or both originate from outside the region in which the asset is located.5) Global Funds are funds which raise capital in multiple regions.
Historic Global Direct Commercial Real Estate Volumes, US$ billion