New market data suggests that global commercial real estate markets have continued to make a solid recovery, largely driven by the Asian and Middle East region.
Compared to the same period last year, the transaction volumes are up by 11 percent in the first half of 2013. Data from Jones Lang LaSalle capital markets research points out that direct commercial real estate investment volumes in the second quarter of 2013 soared to USD 114 billion at a global level. This was higher by 4 percent when compared to the second quarter of 2012.
As the equity and bond markets remained volatile, investors queued up to grab bargain deals in the commercial real estate market. For the past five quarters, the global volumes have exceeded USD 100 billion, signaling strong and sustainable growth in the real estate sector. The Asia Pacific and Europe Middle East Africa (EMEA) region has led the growth momentum, achieving volume growth rate of 11 percent and 12 percent year-on-year, respectively.
Investors from the Middle East have played a pivotal role in stabilizing the global real estate markets. By flexing their financial muscle, Arab investors have continued to purchase luxurious properties in some of the world’s largest cities. Institutional, private equity and high net worth individual investors are seeking to diversify their asset portfolio and hedge against risks by securing prized assets in different parts of the world.
Buyers from the Middle East region are also investing in residential properties of other major global cities, such as Chicago and Kuala Lumpur. These emerging cities provide full legal ownership to foreign investors and benefit from a strong tenant demand. Recently, Turkey changed its law to encourage real estate investments by Gulf nationals. As a result, the country has witnessed a sale of over 2000 units to Gulf investors over the last eight months.
The report forecasts transaction volumes to touch USD 450-500 billion, easily surpassing previous year’s volumes. The rising cost of global real estate debt is not expected to dampen the effect on transaction volumes.