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Commercial Real Estate Investment
Jones Lang LaSalle
David Green Morgan
JLLS Global Capital Markets Research
Commercial real estate investment in Europe increased in the second quarter, after falling for the past few months because of the ongoing sovereign debt crisis. According to the to Jones Lang La Salle's latest capital markets survey, investment volumes increased by 17% quarter on quarter, with foreigners accounting for some 40% of investments. In France and Russia foreigners were even more prominent, accounting for 75% respectively, although the three biggest cross-border deals were in London.
On the slightly less positive side, investment volumes in southern Europe remained muted according to the report, and the foreign investors continued to focus on a very narrow range of assets and locations.
According to the report 108 billion USD was invested globally in Q2, which is a 24% increase compared to Q1, but flat compared to Q2 2011. The Americas posted the most significant increase in quarterly volumes, with a 33% rise to $47 bn while Asia Pacific was the only region to record year-on-year growth, with $26 bn compared to $20 bn in Q2 2011 as China, Australia, Hong Kong and Singapore all recorded increased trading activity.
Perhaps the biggest surprise was the fact that London was the top city for investment volumes, with $8.7 billion invested in Q2, followed by Paris with $4.7 billion and New York with $4.3 billion.
Robert Stassen, Head of European Capital Markets Research at Jones Lang La Salle said, 'Real estate lot sizes (in London) are in the right bracket to attract the big ticket money. You also have all the benefits of a strong education system, a central time zone, good transport links and a stable government. If the market picks up in the second half of the year, we will see interest grow in real estate outside of the capital.'
JLLS predicts that investment volumes will continue to grow in the second half of the year, because investors will turn towards real assets to achieve better yields. 'We have seen increased activity from Canadian, US and Middle Eastern money. We can also expect increased activity from capital from Asian countries such as China, Indonesia and Thailand,' noted David Green-Morgan, Global Capital Markets Research Director at JLLS.
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