Global investment activity set for a 22% increase on 2014

Global investment in commercial property has grown sharply in the first half of the year to reach USD 318bn, 15% higher than H1 2014, according to research published by global real estate services company DTZ.

The global increase masks differences across the regions, with Europe and North America remaining firmly in growth mode, while activity in Asia Pacific has slowed since last year. Over the last 12 months European volumes rose 23% to USD 274bn and in North America volumes increased by 18% to USD 311bn. In contrast, the Asia Pacific region was 7% lower on the same period a year ago, at USD 90bn over the last twelve months.

Nigel Almond, Head of Capital Markets Research at DTZ, said: “In contrast to Europe or North America, investment volumes across Asia Pacific remained strong through the financial crisis and its aftermath. They hit a peak of USD 104bn at the end of 2014 but in the last six months activity has been stifled by a lack of suitable product and, in some markets, a mismatch between buyer and vendor expectations.”

At the city level, London retains its position as the most traded market with over USD 39bn transacted in the 12 months to the end of Q2 2015, 7% higher than a year ago. Manhattan was the next traded market at nearly USD 28bn, followed by San Francisco at USD 21bn. Tokyo, at USD 18bn, was the most traded Asian market and fourth largest globally, although volumes were flat compared to the same period a year ago.

Nigel Almond added: “London retains its position as the leading city for attracting inter-regional investment, equivalent to nearly two-thirds of all investment in the past 12 months. The volume is similar to the inter-regional total for the next four leading cities of Manhattan, San Francisco, Chicago and Los Angeles combined.”

Apart from the continued dominance of capital from global funds, North American and Chinese capital is the most predominant across all regions. The strength of North American funds reflects an increased appetite for platform deals. Norwegian, Qatari and Taiwanese capital is also growing in strength.

Nigel Almond commented: “Despite prime yields edging towards new lows in many markets, the attractiveness of real estate remains in the low interest rate environment. Continued demand for real estate will see global investment volumes this year increase by 22% to reach levels close to their previous 2007 peak of USD 791bn.”