The recovery in the global real estate market is slowing after a surge forward in 2011 according to the latest release of Jones Lang La Salle's Global Market Perspectives report.
According to the report global investment volumes in the second quarter of this year were down 21% year on year, but 24% higher than the previous quarter. However, according to Jones Lang La Salle, the drop in volumes is more because of a lack of the right stock than a fall in sentiment. The firm predicts that overall investment volumes for 2012 will finish at around the same level as 2011 (around the $400 billion mark), because of activity and deals in the pipeline.
Another positive is the continued improvement in the global office vacancy rate, which stands at 13.4% as of Q2, the lowest level for 2 years. Europe's prime retail sector is another cause for hope, with rents in the sector rising at their fastest level for over a year.
The US residential sector continues to go from strength to strength as the home-ownership rate shows the continual flight to renting. The apartment sector continues to be the most sought after for investors in American real estate.
Arguably the most interesting part of the report (which is very "comprehensive") is a peek at the Global Real Estate Health Monitor. Looking at Dubai on the top one is forgiven for thinking that they are looking at a league style table, with the emirates 4% GDP growth and 8.3% prime yield much stronger than those below it. However, the table is actually in alphabetical order, and Dubai's 45% vacancy rate is as good a tell of that as, well, the alphabetical ordering that becomes apparent as you move down.
Anyway, the table is interesting because it is a one-stop shop for all the figures one might be looking for on all the big-name locations of the day. Overall the strongest city in the table looks to be Sao Paulo with a prime yield of 10%, capital value change at 23.6%, and 30.1% rent growth, although its 11.9% vacancy rate is a bit of a let down. London looks strong on the table 2.7% capital value change, 4% prime yield, 2.7% rent growth and a vacancy rate of just 5.4%.
- Wednesday 08 August 2012