Skip Ribbon Commands
Skip to main content

News Release

Vietnam

Investors hit pause amid global political uncertainty

2016 looks likely to be a year that politics will play a major role in determining investor sentiment and, subsequently, global market activity


New quarterly figures from JLL show a 12 percent year-on-year decline in global real estate transaction volumes in Q2 2016, with activity totaling US$148 billion. This brings half year volumes to US$281 billion, a 13 percent decline on the first six months of 2015.

As a result of weaker investor activity over the first six months of the year, and with a further decline expected over the second half, JLL predicts that full year global transaction volumes in 2016 will reach approximately US$600 billion – 15 percent lower than the US$704 billion recorded in 2015.

"2016 looks likely to be a year that politics will play a major role in determining investor sentiment and, subsequently, global market activity," says David Green Morgan, Global Capital Markets Research Director, JLL.

"While this is certainly not a repeat of 2008 – rather an adjustment to the strong growth we've seen in previous years – we do see an unsettled picture in terms of investor sentiment; with many finding reasons to pause their investment decision making.

"We have already seen how markets have reacted to the unexpected referendum vote in the UK and with U.S. elections around the corner we are likely to see continued uncertainty for the rest of the year."

Despite ongoing headwinds, some bright spots of activity remain, and a full-year total of US$600 billion will still place 2016 as the fifth most active year for real estate transactions since JLL began recording global volumes in 2003.

Green Morgan adds: "Despite the political situation in the UK, which continues to adjust in the aftermath of Brexit, the contagion is not widespread in Continental Europe and activity remains positive in France, the Nordics and CEE markets."

"Given the rate of growth in transactional volumes over the last few years and its subsequent effect on pricing, maybe a pause was only to be expected. There remains abundant capital looking to be deployed within real estate but there remains challenges associated with deploying that capital without driving prices to unsustainable levels."


Regional overview

The Americas
Volumes in The Americas have maintained a downward trend, coming in 14 percent lower than Q2 2015 at US$69 billion, which leaves activity over the first half of 2016 15 percent lower than a year ago. While much of the regional performance is driven by the slowdown in the United States, Canadian volumes have recovered after a slow first quarter with a four percent rise on the first six months of 2015. Elsewhere, in Latin America, investment activity is well behind 2015, despite several big-ticket hotel and retail portfolio deals in Chile over the quarter.

EMEA
European activity has, perhaps surprisingly, bucked the downward trend in the second quarter with volumes hitting US$57 billion, which is in line with the second quarter of 2015 in both U.S. Dollar and Euro terms. However, given the weak start to the year, overall H1 volumes are nine percent lower than 2015. While much of the weakness in activity is emanating from the UK which reports a 32 percent decline over the first half, transaction volumes in the second quarter were actually higher than the first. Nonetheless, there is some positive activity across the continent with French volumes 14 percent higher than H1 2015 while the Nordics recorded some strong results – activity in Sweden is up by 70 percent in the first half of the year. Across Central and Eastern Europe (CEE),volumes grew over the first six months of 2016 with Poland, in particular seeing deal volumes double on the same time last year. Meanwhile, investment activity in Germany is down 8 percent from a very strong 2015.

Asia Pacific
Asia Pacific, which supported global activity in the first quarter, has felt the impact of negative sentiment in the rest of the world and investment activity has decreased significantly over the second quarter, coming in at US$22 billion – 28 percent down on a year ago. This is largely due to a slowdown in China and Japan where volumes came in at 39 percent and 20 percent lower respectively. Activity in Australia remained flat as tight supply restricts activity while Singapore was the only market in the region (covered by JLL) to report an uptick on H1 2015 volumes, owing to the US$2.45 billion Asia Square office sale in June . Quarter-on-quarter, every market in the region is down on the first half of 2015, leaving volumes 15 percent lower year-on-year.