GLOBAL - A slowdown in investment in some markets has done little to dent global investment in real estate, according to figures published by Jones Lang Lasalle (JLL).
Direct investment in the first half of 2007 totalled US$382bn (€276bn), an increase of 16.6% over the same period the previous year.
Investment volumes were concentrated in Europe, North America and Asia-Pacific. The UK, Germany and France combined accounted for more than 60% of European investment volumes – up 4% thanks to demand from US, Spanish and Irish investors.
Demand for prime and trophy assets – with six single European assets sold for more than US$1bn – increased as secondary pricing in some markets came close to that for prime assets. The demand helps explain continued investor interest in a saturated UK market despite interest rates at close to 6%.
Tony Horrell, CEO of JLL’s European capital markets group, forecasts a strong global real estate market for the rest of the year, with demand coming from funds in the Middle East, North America, Ireland, Germany and Australia.
However, he added in a press statement he expected investors "to become increasingly selective about markets".
The cost of European and US debt, which has resulted in negative yield spreads in many markets, is also likely to push leveraged investors to adopt increasingly opportunistic strategies, including development.
Another report published last week by CB Richard Ellis forecast an increase in the number of cross-border investors, growth in the real estate products available to them, an expansion of investible opportunities and diversification of investment strategies.
Notably, the report claimed the next decade would see "growing recognition of the attractiveness of real estate within the context of a multi-asset portfolio".