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Paris and London lead as destinations for cross-border capital, while the biggest sources include Canada, Singapore and Germany
CHICAGO, LONDON, SINGAPORE, 11TH May 2011- Cross-border direct commercial real estate investment volumes reached US$37 billion in Q1 2011, up 25 percent from a year ago, according to the latest Global Capital Flows report from Jones Lang LaSalle. Inter-regional volumes (capital moving between the Americas, EMEA and Asia-Pacific) rose to US$26 billion, a 70 percent increase over Q1 2010. This emphasises the appetite real estate investors have for acquiring foreign assets and far exceeds the 40 percent gain across the total market (cross border plus domestic investment) in the first quarter.
The most active cross-border purchasers in Q1 were the global funds, Canada, Singapore and Germany. Meanwhile, the Americas region was the largest net beneficiary in terms of inter-regional capital inflows, at US$2.6 billion, followed by EMEA with an inflow of US$2.2 billion. Asia-Pacific experienced a net outflow of US$3.3 billion in the quarter, highlighting the importance of both private and institutional capital coming from that region’s high growth economies.
Arthur de Haast, head of the firm’s International Capital Group, comments, “Inter-regional volumes are up 70 percent in Q1, with almost US$16 billion in direct commercial real estate acquisitions. Although domestic buyers dominate in the US and Asia Pacific, over one third of all volumes in EMEA are inter-regional reflecting the international appeal of markets like London and Paris.”
Of the top 10 city markets in Q1 claiming the highest investment action, five were in in Asia Pacific including Tokyo, Singapore, Hong Kong, Seoul and Shanghai; three in the Americas, New York, Washington DC and Los Angeles; and two in EMEA, London and Manchester. Manchester benefitted from a single large retail transaction, boosting it into the top ten, whilst London remained the global focus for cross border investors from Asia Pacific and the Middle East.
Paul Guest, head of Global Research Capital Markets Research comments: “Looking ahead, Tokyo’s market will unavoidably be affected by March’s natural disasters. Investors are requesting updated engineering reports and this will delay some acquisitions, though domestic and global investors tell us they are committed to the market medium term. London remains a focus for many cross-border investors, while the re-kindling of activity in the United States will push its markets back up the top 10 over the course of 2011. Do not underestimate the large emerging markets not already in the top 10; watch Bangkok, Beijing, Moscow, São Paulo and Warsaw.”
Globally the retail sector’s share of total volumes rose in Q1 to nearly a third of all transactions, from a quarter of all transactions in 2010. While the office sector’s total share slipped to 45 percent from nearly half of all volumes in 2010.
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Notes to editors
Global Capital Flows is a free to air analytical tool, providing a set of data designed to understand how commercial real estate capital is moving around the world. The quarterly report can be found on an interactive website which also acts as a portal for clients to access Jones Lang LaSalle’s global capital markets research. Further information can be found at http://www.joneslanglasallesites.com/gcf
Definitions:1. Intra-regional: Both purchaser and vendor originate from the region where the asset is located. For instance, a US REIT purchasing in Canada, or a German Open Ended Fund selling in the UK.2. Inter-regional: Purchaser, vendor or both originate from outside the region where the asset is located. For instance, a US REIT purchasing in Denmark, or an Australian Pension Fund selling in Canada.3. Cross-border: Refers to any purchaser, vendor or both that originates from outside the country in which the relevant transaction occurs. Categorised into Inter-regional and Intra-regional transactions.4. Domestic: Refers to any investor that originates from within the country in which the relevant transaction occurs. Transactions involving both “domestic” purchaser and seller are referred to as “domestic” activity.5. Entity-level transactions, development projects and multi-family residential investment are excluded from our provisional data and may change.6. Jones Lang LaSalle converts transaction values into USD at the average daily rate for the quarter in which the transaction occurred. In other words, the foreign exchange effect has not been removed.7. Global Funds are funds which raise capital in multiple regions.
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