Full year real estate investment volumes in EMEA are expected to be 30 per cent higher than in 2009, despite the third quarter witnessing a 12 per cent decline in volumes on the second quarter to 21 billion euros ($27 billion), said a report.

Preliminary global direct commercial real estate investment volumes totalled $69 billion in the third quarter of 2010, according to a new study by Jones Lang LaSalle, an international real estate services firm.

Richard Bloxam, head of the firm’s pan EMEA (Europe, Middle East and Africa) capital markets team, said: “Compared with 2009, investor sentiment remains positive across the region.”

“For the full year we expect EMEA investment volumes to be 30 per cent higher than in 2009.  Looking forward, both Germany and the Nordics are likely to see higher volumes, where improving fundamentals and resilient economies are boosting investor confidence,” he added.

Direct commercial real estate investment volumes in the first three quarters of this year have reached $202 billion compared to the $139 billion transacted over the same period of 2009, the study said.

Jones Lang LaSalle expects volumes for the full year to reach $280 to 290 billion.

Fadi Moussalli, regional director of the International Capital Group (ICG), Mena at Jones Lang LaSalle, noted: “A significant weight of equity capital is targeting prime assets across all sectors, but a scarcity of prime product for sale is constraining investment volumes. Product shortages are also resulting in yield compression and substantial rises in prime capital values across many of the world’s leading office markets, from London to Washington DC to Shanghai.”

He added: “For the full year, we now expect global direct real estate volumes to reach $280 to 290 billion, marginally below our original projection of $300 billion, but nonetheless representing a 35 to 40 per cent increase on 2009.  Further growth in volumes is anticipated in 2011, with cash-rich investors widening their geographic search, pushing into value-added opportunities and eventually into secondary stock.”

A lull during the summer months, a lack of core product and ongoing concerns around sovereign debt in some countries have restrained transaction volumes in the past quarter.
 In Spain and Italy, volumes are down significantly from second quarter, while in the UK and Germany, the pace of activity has slowed.  This is counterbalanced by an increase in investment volumes quarter on quarter in France and, more notably, in Sweden.

Damian Corbett, head of offices capital markets England, added: “Although volumes in the UK, Europe’s largest market, appear to have levelled off, demand remains very strong particularly for prime assets. Transaction volumes in Central London alone are likely to hit over GBP10 billion ($15 billion) in 2010 which is a 20 per cent increase on 2009. Interest in London is coming from across the world with investors from over 45 countries actively bidding.”

In the Americas capital market momentum has continued to build, with volumes up 12 per cent in the third quarter. With a significant pickup in activity, particularly in the US gateway cities, US volumes have risen by a further 24 per cent in the third quarter, and are more than 50 per cent higher than a year ago, the study said. – TradeArabia News Service