New data from Jones Lang La Salle seems to add weight that global real estate investment is slowing. According to the firm $75 billion was invested in commercial real estate in Q1 2012, which is a 23% contraction on Q1 2011. The firm puts this down to factors like big sales in Q1 2011, such as the Trafford Centre in the UK for $2.6 billion, which weren't repeated in Q1 2012, as well as the continued economic malaise restricting debt financing, especially on new borrowing.
However, this could yet be a bump in the road, as according to the report the market is still strong. For example, the firm's Q4 figure was revised up to $112 billion, which is the strongest quarter since Q2 2008 and the figure for 2011 was also revised upward to $418 billion, which made it the strongest on record.
Arthur de Haast, Head of the International Capital Group forecast that real estate investment will pick up over the year to finish about the same level as 2011 ($400 billion), citing the underlying attractiveness of real estate continues due to strong demand and sound fundamentals.
"Whilst volumes are down in Q1 2012 and the economic backdrop remains uncertain, the underlying attractiveness of real estate continues due to strong demand and sound fundamentals.
"The final quarter of 2011 was one of heightened uncertainty in Europe, but reassuringly policy makers realized the seriousness of the situation and took the appropriate action, which helped to stimulate activity across the continent," he said.
It is not all contraction either, according to de Haast investment volumes in the US continue to grow, and were up by 16% year on year in Q1 2012, while Canadian and Mexican volumes increased by 50% over the same period. He also forecast a recovery in investment in the Asia-Pacific region, which fell compared to last year in Q1.
- Monday 16 April 2012