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| Direct real estate investment hits record in ‘07 but to be down in ‘08 After a record year in 2007 for direct real estate investment globally, with volumes up 8% year on year to $759 billion, Jones Lang LaSalle has commented on the outlook for 2008 in its new Global Real Estate Capital report. The firm expects global investment market volumes for 2008 to be down over 30% on 2007. The Americas and European investment markets will certainly see a material decline in full year volumes and, although Asia may be more resilient, volumes will not achieve the heights of 2007. Tony Horrell, International Director and Head of European Capital Markets commented: "Reduced debt availability and investor confidence are likely to be here to stay for much of the first half of 2008 as the impact of the debt squeeze continues to ripple through markets, and central bankers and financiers work to stabilize and stimulate the debt markets. The situation is being exacerbated by unease about the global economy, in particular about major economies such as the US, the UK and Japan." Jones Lang LaSalle sees a number of factors that will constrain volumes this year; buyers and sellers adopting 'wait and see' strategies; prices having peaked in 2007 in many major markets; a misalignment between buyers' and sellers' price expectations; reduced availability of debt, tougher lending criteria and increased debt costs; reduced willingness and capacity to transact large lots sizes, a narrower spectrum of investors; and more exacting due diligence which leads to longer transaction processes. Mr Horrell continued: "However, we do not expect a strategic and planned withdrawal of capital from real estate in 2008, or investors to significantly adjust their allocations to the asset class. Forecasts for 2008 remain positive and the long-term trends in real estate, such as the growing credibility of real estate as an investible asset class, improving transparency, urbanization, and restricted supply, continue to be positive drivers." Whilst domestic investment remained at around $400 billion globally in 2007, similar to 2006 volumes, cross border investment increased by $58 billion to $357 billion in 2007 and of that, inter-regional investment accounted for $242 billion. In percentage terms cross border transactions now account for 47% of total transactions and inter-regional for 32% of total transactions. The US, Germany and the UK have been the traditional targets of inter-regional investors. These markets accounted for 25%, 19% and 15% of inter-regional purchases respectively. However, there was a significant fall in the share of this investment attracted to the UK and Germany as new markets were targeted. Japan (11%) and France (9%) moved up the popularity curve, with global funds very active in both markets. Together these five markets accounted for 80% of total inter-regional purchases. The emerging markets of China, Poland and Russia also attracted strong interest. write your comments about the article :: © 2008 Construction News :: home page |