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Global Commercial Real Estate Investment is Climbing

Compared with last year’s anemic volume, global commercial real estate investment has increased dramatically through the second quarter of 2010, according to a new report by Chicago-based real estate services firm Jones Lang LaSalle.

For the first half of the year, direct commercial real estate investment volume totaled $130 billion. In the second quarter alone, direct commercial real estate investment reached $66 billion, the company says.

“For the full year we anticipate volumes globally of around $300 billion, which represents a healthy 40% to 50% increase on 2009. This is still less than half the pre-credit crisis levels of 2006 and 2007, but we must take into account the fact that those were heady years for commercial real estate investment, with unprecedented record trading volumes,” says Arthur de Haast, head of the international capital group at Jones Lang LaSalle.

“This is solid progress for commercial real estate investment markets,” adds de Haast, even though volumes are still well below pre-credit crisis levels.

Brazil shines
Some regions of the world have fared better than others, in terms of investment. The strongest growth occurred in Brazil, where quarterly volume tripled to a record $1.6 billion.

Canada also has seen strong quarterly improvement. Investment volume there doubled to $3.5 billion.

In the United States, investor demand continues to be strong for core assets, but the lack of product supply hinders direct investment volumes, says Steve Collins, head of the Americas capital group for Jones Lang LaSalle. As more product comes on line, investment is projected to increase.

“We expect total transaction volume in the Americas region for the full year 2010 to increase by at least 80% over 2009 and reach the $80 billion to $85 billion range,” says Collins.

Asia Pacific slips
Meanwhile, the Asia Pacific region experienced a 34% decline in investment volume in the second quarter to $15 billion. Significant declines occurred in Japan, China and Australia, while Hong Kong and Taiwan saw increases.

Still, compared with the same quarter last year, volume in the Asia Pacific region were up by 21% over 2009, when investment reached $13 billion.

“In Asia Pacific, the first half of 2010 has posted reasonably strong increases over the corresponding periods of 2009. If this trend continues, aggregate volumes could be around 30% higher this year to reach the mid-$80 billon range,” says Stuart Crow, head of the Asia capital markets group.

In Europe, the Middle East and Africa, commercial real estate investment volume rose a modest 15% in the second quarter compared with the first quarter, to €23 billion ($29 billion). That represents a healthy increase of 80% from a year ago. The United Kingdom accounts for more than 40% of the investment volume among the three regions.

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