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News Release

Increasing Global Equity Drives Commercial Real Estate Transaction Volumes in First Half of 2014

Preliminary volumes up 27 percent over H1 2013


chicago, LONDON, SINGAPORE, July 09, 2014 – Increasing allocations into commercial real estate in the first half of 2014 is driving transaction volumes higher across much of the globe, with direct commercial real estate transactions reaching US$294 billion, up 27 percent over the same period last year.  Due to the stronger-than-expected performance in both the Americas and Europe, as well as the steady volumes in Asia Pacific, JLL is revising its earlier full year transaction volume forecast from US$650 billion to US$700 billion. 

 “Global commercial property investment markets continue to perform well spurred on by improving economic data and occupational fundamentals,” said Arthur de Haast, Lead Director International Capital Group at JLL.  “While we are approaching transactional levels last seen in 2006, the nature of this cycle is very different.  The return of fully functioning debt markets over the last 12-18 months has certainly played a part in improving investor sentiment, but the real driver of these increases in transactional volumes is more and more equity targeting direct commercial real estate.”
The Americas
The greatest growth in global transactional volumes is in the Americas, where volumes have surged by 43 percent in the first half of 2014 compared to last year.   The United States continues to be the catalyst, but this quarter it was joined by Mexico and Brazil where industrial and retail portfolio transactions have pushed H1 volumes already well above 2013’s full year totals for both countries.
Europe
European volumes are not far behind in terms of growth with transactions in the first half 34 percent higher than last year, while Q2 2014 is 50 percent higher than a year ago.  An increase in transactional volumes across the region is supporting growth in the core markets.  Southern Europe, the Benelux and Central and Eastern Europe are all more than 50 percent higher than in the first half of 2013.  The growth in transactions is broad-based, with the core markets of the United Kingdom, France and Germany also 30 percent higher over the first half of 2013.
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Asia Pacific
In Asia Pacific, transactional activity has increased following a quiet start to the year.  The US$32 billion recorded is in line with Q2 2013 and means H1 volumes are now just 8 percent below those from H1 2013.  Japan has been the star performer in recent quarters, but in Q2 investors reduced their rate of buying following a strong start to the year.  Australian volumes were boosted by a large one-off REIT privatization while China and South Korean transactions have recovered from a weak Q1.
“New sources of capital from emerging economies have grabbed many of the headlines in the last few years. But what is really pushing transactional markets higher currently is the increasing allocations towards direct real estate from the traditional sources of capital; pension funds, endowment capital, private equity, combining in many instances with the new sources to acquire assets.  While short and long term interest rates globally continue to hold at historically low levels, we see direct real estate as continuing to attract capital,” concluded David Green-Morgan, Global Capital Markets Research Director at JLL.

Stephen Wyatt, Country head of JLL Vietnam commented "JLL Capital Markets and Corporate Finance departments throughout Asia Pacific advised on transactions worth $21.5 billion in 2013, this level of interaction and activity with the most prominent investors in the region provides us with a valuable insight into their views on the Vietnamese market.

Over the past 6-12 months we have seen a change in mind set from a number of foreign investors on the Vietnamese market. We are now witnessing renewed interest from many large pension funds, private equity firms and developers looking to allocate funds to Vietnam.  This is a dramatic turnaround from the past 3-4 years when Vietnam was considered a "no go" for many.

The general consensus for many foreign investors is that economic conditions are stable and the real estate market is at the bottom of the cycle, this is fuelling an increase in activity, however, challenges remain when investing in an emerging market and investors are cautious when making their first acquisition in a new country.

As market conditions continue to improve we expect that foreign investors with existing operations in Vietnam will have first mover advantage and will use their knowledge of the local market to increase their exposure and portfolios".

Notes to Editors:
1.      Property types in the Global Capital Flows report include hotels, office, industrial and retail.  The numbers represented here are preliminary; the final Global Capital Flows report for Q2 2014 will be released in late July 2014.
2.     Jones Lang LaSalle’s Global Capital Flows analysis provides a set of data designed to help investors understand how commercial real estate capital is moving around the world. The findings are released quarterly, first in the transaction volume analysis represented in this release, and secondly in a broader quarterly report which will be issued in the following weeks. All of the current Global Capital Flows data can be found in an interactive website which also acts as a portal for media and clients to access Jones Lang LaSalle’s global capital markets research. Bookmark this site for the most up to date global real estate data: http://www.joneslanglasallesites.com/gcf