Global Commercial Real Estate Investment Volumes Reach $436 Billion in 2012

Global Commercial Real Estate Investment Volumes Reach $436 Billion in 2012

Commercial News » North America Commercial News Edition | By Michael Gerrity | January 10, 2013 12:16 PM ET

According to Jones Lang LaSalle capital markets research from 60 countries, global real estate investment volumes in 4Q 2012 rallied, with US$141 billion transacted over the quarter to lift the year's total preliminary volume to $436 billion.

The real estate investment volumes in 2012 represented a slight increase on 2011's $435 billion, and a 36 percent increase over 2010.

The strong quarter was attributed, in part, to a yearend rush of United States investors seeking to allocate funds to avoid capital gains taxes from the government's "fiscal cliff" crisis. U.S. volume rose 51 percent quarter on quarter. Mexico, Canada, France, Germany and the Nordic countries also finished the year strong.

Arthur de Haast, Head of the International Capital Group at Jones Lang LaSalle 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."

Key highlights from Jones Lang LaSalle report include:

  • Preliminary global volumes beat forecasts to end 2012 at $436 billion, a slight increase over 2011's $435 billion and a 36 percent increase over 2010.
  • Global 4Q 2012 totals $141 billion compared to $100 billion for 3Q and $119 billion for 4Q 2011.
  • Direct real estate ownership is showing its attractiveness in a low-yield, high-liquidity world with below trend economic growth prospects for 2013.
  • The "fiscal cliff" and pent-up demand pushes U.S. volumes 51 percent higher quarter on quarter as vendors fret over capital gains tax increases and the need to allocate capital, 34 percent up on 4Q 2011 and 11 percent higher year on year.  Canada and Mexico also have a stronger year in 2012 than in 2011, showing growth is across the Americas.
  • 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 LaSalle 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.

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 yearend 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."

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