US leads global commercial property sales growth
The United States led global commercial real estate investment in the second quarter of 2015 with a 30% increase in sales volume, the latest industry research shows.
Despite the debt crisis in Greece and volatility in China’s equity markets, the prelim data from international real estate services firm JLL shows global transaction volumes in the second quarter of the year totalled US$161 billion, unchanged from the same period a year ago.
The Americas, as a whole, posted the best second quarter performance since 2007, at US$79 billion, as the US economy recovers while Russia shows signs of renewed optimism with the strongest level of activity seen in five quarters.
In Asia Pacific, lower transactions in Japan and Australia, the region’s biggest markets, pulled volumes down. In EMEA, transaction volumes were up 11%, measured in local currencies.
‘We can expect the recent decline in global interest rates to support transactional activity for the remainder of 2015,’ said David Green-Morgan, global capital markets research director at JLL
‘As a result, we believe global volumes for the full year will reach US$750 to US$760 billion, a 5% rise on 2014 transactional activity,’ he added.
A regional breakdown shows that sales volume in the Americas climbed 18% both on a year on year and year to date basis, supported by growth in the US. However, in Canada, volumes are down 20% year to date.
According to Matt Picken, managing director and leader of the firm’s Canadian Capital Markets, the volume drop in Canada is due to the significant supply and demand imbalance.
‘We have far more buyers than sellers here, all with a voracious appetite but no product to satisfy the demand. Rather than acquiring portfolios or even single assets, institutional capital in this country is now turning to development,’ he said.
‘The development pipeline has everything from high rise office in major cities to industrial and mixed-use projects, but we do expect sales volumes to bounce back significantly in the second half of 2015 as well,’ he added.
Southern Europe posted a 47% growth in the first six months. The UK, France and Germany were each up 15% in the same period while Nordic investment was up 38%.
In Asia Pacific the strong US dollar is having an effect. Sales volumes fell 19% in US Dollar terms as the region was affected by the strength of the greenback, although Hong Kong was a standout with volumes up 88% despite the ongoing political turmoil.