Cross-border investment returns to pre-crisis levels

Posted: September 24, 2010 in Diverse
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16 Sep 2010

Commercial real estate transactions have almost doubled around the world from last year, and cross-border investment has returned to pre-crisis levels, according to Jones Lang LaSalle (JLL). Total global investment totalled $132bn (€101bn) in the first half compared with $76bn in the first half of 2009, underpinned by strong activity among global investors. Cross-border investment now accounts for 43% of all transactions, having recovered from a low of 31% in the first half of 2009, and JLL said the trend was to continue for the remainder of 2010. The company said the market pick-up showed confidence had improved and that the globalisation of real estate investment had returned. Arthur de Haast, head of the international capital group at JLL, said: “Mixed economic news, plus longer transaction processes due to investor due diligence, may mean investment volumes do not continue to grow at levels seen in the first half 2010. “However, full-year volumes will be between $275bn and $300bn for 2010, significantly ahead of 2009, with cross-border investors continuing to be very active.”

Europe had the highest volumes of cross-border activity in the first half of 2010. More than 54% of European transactions were cross-border, and 24% of that was inter-regional. The Americas, historically driven by strong domestic investors, recorded the highest proportion of inter-regional investment of all three regions: more than 35% of all the Americas transactions were inter-regional.  Asia Pacific transaction volumes were up 40% in the first half compared with the first half of 2009. Nearly 70% of transactions in Asia Pacific were domestic and, of the 31% cross-border transactions, 15% were inter-regional. Richard Bloxam, head of pan-EMEA capital markets at JLL, said: “After the retrenchment in 2008 and 2009 of many investors to their domestic markets, 2010 has seen a bounce-back to pre-crisis proportions of cross-border activity. Total volumes, while recovering markedly year on year, remain subdued in comparison to 2007.” The UK has been the most popular destination for cross-border investment so far in 2010, with $7bn invested, while Germany replaces the US as the second most popular destination. The US dropped to third despite a doubling in transactions in the market from $2.2bn to $4.3bn. Global funds, which raise capital in multiple regions, were the largest investor group, followed by German, Singaporean, Dutch, Middle Eastern, British, South Korean, US, Hong Kong and Swedish sources.

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