REAL ESTATE - Global direct investment in commercial real estate jumped $100bn (€80bn) last year to $475bn, according to new research.
Foreign investors in the US market accounted for almost half of the 21% increase, according to ResearchWorldwide. Investors from Australia, the Middle East, Hong Kong and Ireland significantly increased their investments – mainly in Manhattan, Washington and Chicago.
The greatest growth was in Asia, which saw a transaction volume growth of 56% compared with 2004, with China alone recording $2.3bn. “With its rapid economic growth, relaxed foreign investment laws [in real estate] and improving transparency, China is set to continue to see strong growth in commercial real estate demand in 2006 and beyond,” the property research firm said in a statement.
Europe dominated inter-regional investment – where either vendor or buyer or both originated outside the region – with 60% of the global total. The UK came second only to the US in inter-regional purchase volume, with Germany, France and Sweden also appearing in the top 5.
Middle East and US funds continued to pour into the UK market, closely followed by Irish ($7.5bn) and German ($4.3bn) investors.
With the office sector attracting 56% of global funds overall, the Parisian office market attracted international capital because of transparency and good rental growth prospects, the report said.
Overall, US and Australian investors each accounted for 14% of inter-regional acquisitions. Despite indications that Middle East investors have been diverting real estate investments into the Gulf Cooperation Council markets, notably UAE, they also accounted for 13% of inter-regional purchases.
Listed and unlisted funds, and institutions, were most active in cross-border deals.