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RFP Magazine

New quarterly record for global commercial real estate investment

Q4 transactional volumes up 28% compared to Q3 according to JLL

·         Direct commercial real estate transactional volumes globally reached US$218 billion in Q4 2014, 28 percent up on Q3 and 4 percent higher than Q4 2013

·         Full year 2014 volumes reach US700 billion, up 18 percent on 2013 and in line with 2006 activity levels.

·          Asia Pacific and EMEA both up 40 percent in Q4 compared to Q3 and the Americas up 15 percent.

Arthur de Haast, Lead Director, International Capital Group, JLL said: “The Americas and Europe have been the driving forces of global growth, with economic recovery in the U.S. and UK a key component.  Asia Pacific had been lagging for most of 2014, but a strong final quarter brought it in line with 2013 levels.”

He continued: “Despite there being more uncertainty in the world than there was 12 months ago, we expect direct real estate to continue to appeal in a low interest rate environment, so we are forecasting transactional volumes of between US$730 and US$750 billion in 2015, which would be the sixth consecutive year of volume growth.”

image002David Green-Morgan, Global Capital Markets Research Director, JLL added: “After such a strong run up in transactional activity over the last six years, growth in 2015 looks as though it may be slightly more subdued as investors weigh up their next moves.  The global economy faces new challenges with changing monetary policy in the US, Euro Zone and Japan, pivotal elections in the UK, Spain, Canada and Greece and a Chinese economy coming to terms with lower GDP growth.  However, the macro drivers of investment into real estate remain, fund raising was robust in 2014, institutions continue to allocate more money to direct real estate and emerging economies are relaxing the rules on the export of capital.”

Regional overview

The Americas continued to lead performance globally with volumes of US$298 billion in 2014, which is 24 percent higher than 2013. This number was boosted by another strong final quarter in the U.S. where volumes reached almost US$85 billion, 6 percent higher than the final quarter of 2013.  The US, Brazil and Mexico have maintained good transactional momentum throughout the year while Canada is slightly down on 2013’s performance.

European volume growth almost matched those of the Americas rising 21 percent to US$267 billion for the full year.  Whilst the biggest markets of the UK, France and Germany recorded solid growth of 17 percent, some of the smaller markets saw considerably higher growth: the Nordics (up 41 percent), CEE (up 51 percent), Benelux (up 61 percent) and Southern Europe (up 70 percent).

A stronger than expected final quarter in Asia Pacific has brought the region back in line with 2013 activity.  The US$42 billion recorded in Q4 is the highest quarter on record for Asia Pacific, almost 40 percent higher than Q3, and was boosted by a surge in activity in China and South Korea; both markets that had lagged the region during 2014.  Full year 2014 volumes are at US$128 billion with Australia (+17 percent) and Japan (+4 percent) up on 2013 but China 20 percent lower, despite the strong final quarter.

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