Global direct commercial real estate investment increased 10 percent in the second quarter from a year earlier, led by a surge in Asia activity.
Direct commercial real estate volumes in Asia Pacific were up 18 percent in the second quarter, compared to the same period a year earlier, Jones Lang LaSalle reports. At the same time, outbound investments from South Korea and China has more than doubled in the first half of the year, compared to 2012.
"We continue to see new capital emerge from Asia Pacific, as investors look to diversify their portfolios into prime global cities such as New York and London," Alistair Meadows, director, international capital group Asia Pacific, JLL wrote in the report. "Over the past six months, Chinese and South Korean investors have driven this growth, especially in the residential and office sectors, and we expect emerging market institutional capital to be a major theme within commercial investment markets for many years to come."
Overall, $121 billion was invested directly into global real estate in the second quarter of 2013, a 16 percent increase from the previous quarter and 10 percent higher than last year. Total volumes reached $225 billion for the first six months of the year, according to Jones Lang LaSalle's latest Global Capital Flows report.
Cross border activity grew to $71 billion in the first half, a 13 percent increase from the first half of 2012, accounting for 42 percent of all investment activity. Investment flow out of the Americas and Asia Pacific into Europe totaled $12 billion in the first half, 18 percent higher than last year. Asia Pacific represented the highest level of overseas investment with $8.5 billion directed at European and U.S. commercial real estate.
Continuing a trend, 60 percent of the capital that flowed into Europe in the first half of the year from the Americas, Middle East and Asia Pacific, totaling $12 billion, was invested in London. However, investors are increasingly looking to invest in secondary cities, JLL reports.
Arthur de Haast
"Asia Pacific and the Americas are seeing continued growth in investor appetite for direct commercial property, however, in contrast to what we witnessed last year, both new and experienced investors are taking on additional risk," Arthur de Haast, lead director, international capital group at JLL, wrote in the report. "This has led to increased capital into secondary cities, particularly in Europe and the U.S."
Tokyo reported a 50 percent growth in transactional activity, positioning the city in the same elite circle as London and New York, with volumes over $10 billion in the first half of the year.
U.S. investors remain the most active purchases of global property. The Japanese were the second most active purchasers, with 99 percent of their activity staying in the country.
Based on the 10 percent increase during the first half, JLL is maintaining s forecast of $450 billion to $500 billion of global investments for the full year.
"This more broad based activity should continue and will sustain volumes over the second half of the year, which is traditionally busier than the first," Mr. de Haast said.