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Global real estate investment hits $90bn in Q1

Dubai, April 25, 2011

The global direct commercial real estate investment volumes in the first quarter surged nearly 38 per cent to $90 billion compared to last year indicating the continued appeal of commercial property to a broad range of investors, said a new report.

However this figure is down 20 per cent from the previous quarter, said real estate expert Jones Lang LaSalle (JLL) in its Capital Markets Research.

Arthur de Haast, head of the International Capital Group at JLL said: “We continue to see strong interest for core product in gateway cities from institutional and private investors. However, investors are only moving into riskier markets and products on a selective basis, with many waiting to see more bank-released product or stronger fundamentals first.”

In Asia-Pacific, volumes rose both compared to the previous quarter and to the same period in 2010.

“This continued growth is testament to the strong fundamentals of the region,' remarked Stuart Crow, head of Asia-Pacific Capital Markets at JLL.

'Japan was the most active real estate market, with a confident start to the year, albeit prior to the recent earthquake tragedy. Domestic investors dominated activity in the region’s other major core markets,' he added.

However, in Europe and the Middle East, activity slowed compared to the last three months of 2010, but was up nearly a quarter year-on-year.

Richard Bloxam, director of Jones Lang LaSalle’s EMEA Capital Markets said the seasonal slowdown after the end of year rush was expected, particularly after a closing quarter with a number of large, high profile transactions.

However, compared to the start of 2010 all major markets have seen an increase in volumes, particularly Germany, Poland, Russia and the UK,” he noted.

In the Americas, the volume of activity also dropped off modestly compared to the previous quarter but more than doubled from Q1 2010.

Commenting on the results, Steve Collins, managing director, Americas at JLL, said “We saw a big jump in volumes at the tail end of last year, driven by the US, and we expect a strong year in 2011. The small drop off in Q1 is the result of investors adopting a ‘wait and see’ approach, due to concern they might be chasing yield downward.”

Looking at the global volumes, Paul Guest, JLL global capital markets research director, said there were sound reasons for investors to be looking at commercial property.

'Its perceived inflation hedge; supply shortages in many gateway markets; appealing risk-adjusted returns when compared to more volatile assets; still-attractive pricing outside some of the prime markets which corrected earliest; and even a pick-up in both debt issuance and securitization,' he noted.

'We expect a further $290-310 billion in direct commercial real estate transaction volumes in the remainder of this year,' he added.-TradeArabia News Service

Tags: Jones Lang LaSalle | real estate investment |

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