Global real estate investment volumes are back on the up, with preliminary data from Jones Lang La Salle suggesting total transaction volumes for 2012 somewhere in the region of $436 billion, up from $435 billion in 2011 and up 36% compared to 2010.
The total was boosted by a strong final quarter in which $141 billion was invested. A year-end rush of United States investors seeking to allocate funds to avoid capital gains taxes from the government's "fiscal cliff" crisis is at least partly responsible for the year end surge. This is confirmed by the 51% quarterly rise U.S. volume. Mexico, Canada, France, Germany and the Nordic countries also finished the year strongly.
Arthur de Haast, Head of the International Capital Group at Jones Lang La Salle said, "The surge in the final quarter of the year demonstrates once again that real estate markets are well through the recovery phase of the cycle and are now supporting year-on-year increases in transactional volumes. Based on this evidence we anticipate that 2013 will be another one of growth with global volumes set to be between $450-500 billion."
David Green-Morgan, Global Capital Markets Research Director also commented, "The greater allocations to real estate from a number of institutional and private equity groups are starting to have a real impact on the global real estate investment market. The threat of higher capital gains taxes in the U.S. triggered a wave of year-end transactions, but the underlying factor is the attraction of real estate in a low-yield, high-liquidity environment. Despite the improvement in values over the last three years globally, we are still 15 to 20 percent below the market peak. There remains a great deal of upside potential, particularly in secondary markets which have remained subdued since the financial crisis but are starting to attract investor interest given their more attractive yields."
Key highlights from Jones Lang La Salle report include:
- Direct real estate ownership is showing its attractiveness in a low-yield, high-liquidity world with below trend economic growth prospects for 2013.
- Asia-Pacific has a consistent end to the year, but full-year volumes are down slightly in 2012 at $92.5 billion compared to $98 billion in 2011 with slower economic growth in China affecting volumes in the second biggest market.
- Europe beat expectations by matching 2011 in Euro terms but was eight percent down in US$ terms partly due to a weak Euro. The United Kingdom remained the most active market in 2012 and there was increased activity in Q4 on the continent with France, Germany and the Nordics seeing stronger ends to the year.
- On the back of this better-than-expected end to 2012, Jones Lang La Salle is estimating full year 2013 volumes will be between $450-500 billion, with performance back ended following a similar pattern to 2011 and 2012. Momentum will be maintained in the Americas with Asia Pacific expected to improve and EMEA looking to record a similar performance to 2012.
- Tuesday 15 January 2013