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| Global real estate investment to reach US$475bn Jones Lang LaSalle's latest global real estate capital report, released at MIPIM, records global direct commercial real estate investment of US$475bn (euro 383bn) in 2005, up 21% on 2004. North America remained the largest investment destination (nearly half of total transaction volumes) whilst Asia Pacific witnessed the strongest year on year transaction volume growth at nearly 56%. Cross-border investment (as a proportion of total investment) increased from 29% in 2004 to 35% in 2005, reaching US$164bn (euro 132bn), with Europe accounting for over two thirds of volume transacted. Inter-regional investment transaction volumes rocketed by 40% and now account for almost a quarter of total global transaction volumes. This impacted most on Europe which attracted 60% of inter-regional purchase volumes, whilst the US was the most popular country for inter-regional investment followed by the UK, Germany, France and Sweden. Global sources of funds dominated inter-regional investment in 2005, accounting for approximately US$32.9bn (euro 26.5bn) on the buy side and US$28.9bn (euro 23.3bn) on the sell side, an indication that these investors are actively managing their international property portfolios to achieve higher returns and international diversification. Whilst US and Australian investors each accounted for 14% of inter-regional purchases, Middle Eastern investors also remained a major source of inter-regional capital (US$9.9bn, euro 8.0bn), purchasing significant volumes in both Europe and South America and accounting for 13% of inter-regional purchases. Tony Horrell, CEO of Jones Lang LaSalle's International Capital Group, commented: "As allocations to international real-estate grow, opportunistic capital is increasingly targeting the shores of recovering and emerging markets. Germany's economic recovery and real estate market re-emergence continued in 2005; we saw inter-regional investors make US$10.8bn (euro 8.7bn) of purchases and US$6.1bn (euro 4.9bn) of sales. Unlike other recovering and re-emerging markets, Germany offers cross-border investors a significant stock of opportunities; retail in particular is proving popular as it offers high-yields, potential rental growth and significant asset management opportunities." He continued: "Similarly sustained economic recovery and the end of deflation in Japan has encouraged real estate investors to return to the Japanese market which is driving yields down and prices up. Investment volumes were up by 28% over 2004 levels, with the majority of investments made by Japanese listed, unlisted and institutional funds. With Japanese corporate earnings rebounding, unemployment and office vacancy rates declining; the scene is set for a strong recovery in the occupier market. Japan is a market to watch in 2006." Report highlights: -- France -- Continued strength in attracting inter-regional capital, recording US$7.2bn (euro 5.8bn) of purchases and US$5.0bn (euro 4.0bn) of sales for positive net inflows of approximately US$2.2bn (euro 1.8bn). Global investors dominated inter-regional purchase activity, with the Paris office market (one of the largest in Europe) being a favoured destination for international money due to its high transparency and good rental growth prospects. -- The UK -- At an inter-regional level, the UK was dominated by Global, Middle Eastern and US sources of funds although intra-regional sources of capital were also significant, namely Irish at US$7.6bn (euro 1bn) and German at US$4.3bn (euro 3.5bn). -- The US -- US$21.8bn (euro 17.6bn) of purchase activity was recorded in 2005 and US$14.0bn (euro 11.3bn) of sales activity, recording a positive net inflow of US$7.8bn (euro 6.3bn). 2005 was a strong year for cross-border flows into Latin America, in particular Mexico as it increasingly becomes a target for inter-regional capital, recording US$2bn (euro 1.6bn) of purchases and US$.08bn (euro 0.6bn) of sales. In 2005, China emerged as an increasingly popular destination for inter-regional capital, recording US$2.3bn (euro 1.9bn) of purchases. Although inter-regional transaction volumes in China are currently far smaller than the larger markets of UK, USA, Germany and France, the potential proportion of investible stock will continue to grow with rapid economic expansion, relaxed foreign investment laws and improving transparency. China is set to be another strong growth market in 2006. Inter-regional purchase activity in 2005 was overwhelmingly dominated by unlisted and listed funds and institutions. Unlisted funds were the largest inter-regional purchasers in 2005 -- increasing their purchases by 73% over 2004 levels. Increasing their share of inter-regional purchase activity by 55%. Institutions were significantly more active in 2005, however were overall net sellers. In 2005, inter-regional investment saw relatively little change in the overall distribution of capital between property sectors. Office transactions remained the dominant sector, accounting for approximately 56% of total transactions, retail 26%, industrial 13% and hotels 5%. Jones Lang LaSalle has more than 100 offices worldwide and operates in more than 430 cities in 50 countries. Jones Lang LaSalle is an industry leader in property and corporate facility management services, with a portfolio of 923 million square feet worldwide. write your comments about the article :: © 2006 Construction News :: home page |