The second half of 2012 will be much better for global real estate markets than the first six months of this year, demonstrating a reversal of the trends witnessed in this sector over the course of 2011. This is the assertion of Cushman & Wakefield, which predicted a slow start to the year followed by an improving picture as 2012 draws to a close. According to the firm, sovereign debt concerns in Europe and the US, which were among the main factors to weigh on property markets at the end of 2011, are continuing to affect commercial real estate investment. However, as resolutions to these problems are found, confidence in the market will return.
President and chief executive officer at Cushman & Wakefield Glenn Rufrano commented: "Despite uncertainties, there remains a well of pent-up demand in most nations. As the year progresses and uncertainty subsides, improving economic conditions will support a boost in commercial real estate activity." The organisation highlighted some key trends to look out for in 2012, including deleveraging by financial institutions, which will result in more opportunities for property investors. The fundamentals of global commercial real estate sectors are also predicted to improve over the next 12 months, with the company pointing to the office rental market in particular due to expectations of lower vacancy rates and higher rents by the end of 2012.
In terms of investment volumes this year, Cushman & Wakefield is anticipating a figure 7.5 per cent higher than the value of transactions conducted in 2011. The firm asserted the bulk of this increase will be as a result of activity in both North and South American markets, with deals in Asia and Europe expected to remain broadly flat. Earlier this month, Jones Lang LaSalle highlighted the relative strength of prime US office markets in its annual North American Skyline Review. The organisation noted a lack of supply of top-quality space will enable landlords to increase rents while reducing tenant improvement allowances. Demand from occupiers, meanwhile, will ensure vacancy rates in the nation's main central business districts continue to fall. With these factors working together, investors may decide to make US office assets a target.
- Thursday 15 March 2012