Preliminary figures released today by Jones Lang LaSalle's research on global direct commercial real estate (CRE) investment volumes showed that these investments continue to appeal to a broad range of investors.
Figures indicated that investment volumes totalled under $90 billion in 1Q11. This figure is down 20% from the previous quarter but up nearly 38% from 1Q10.
"We continue to see strong interest for core product in gateway cities from institutional and private investors, " said Arthur de Haast, head of the international capital group at Jones Lang. "However, investors are only moving into riskier markets and products on a selective basis, with many waiting to see more bank-released product or stronger fundamentals first."
In the Asia-Pacific, volumes rose both compared with the previous quarter and to the same period in 2010. Japan was the most active real estate market prior to the recent earthquake tragedy. In Europe and the Middle East, activity slowed compared to the last three months of 2010, but was up nearly a quarter year-on-year. In the Americas, the volume of activity also dropped off modestly compared the previous quarter but more than doubled from 1Q10.
"There are sound reasons for investors to be looking at commercial property: its perceived inflation hedge; supply shortages in many gateway markets; appealing risk-adjusted returns when compared to more volatile assets; still-attractive pricing outside some of the prime markets which corrected earliest; and even a pick-up in both debt issuance and securitization," said Paul Guest, Jones Lang LaSalle's global capital markets research director. "We expect a further $290-310bn in direct commercial real estate transaction volumes in the remainder of this year."