Crisis likely to affect deal volume in Q4: JLL

Global real estate investment activity held up well in the third quarter of 2011 but worsening economic sentiment is likely to have an impact on transaction volumes in Q4, according to JLL's latest Global Capital Flows research report.

Q3 2011 saw $99.4 bn (EUR 74 bn) in direct commercial real estate investment worldwide, up 36% from a year ago, with the most active city markets being London ($6.9 bn), New York ($4.3 bn) and Tokyo ($3.6 bn)

While transaction volumes in the Americas in Q3 were down on Q2, Europe and Asia Pacific held firm, showing an increase of 15% and 13% quarter-on-quarter respectively. JLL warned, however, that European volumes may be affected by sovereign debt concerns in Q4. As such, the broker is now expecting a 10% downside risk to its previous full-year 2011 volumes estimate of $440 bn.

The US, the global funds, and the UK were the most active sources of investment capital (including both domestic and cross-border) during Q3. The global funds, Singapore, and the US were once again the biggest cross-border investors. Equity market volatility and tougher fundraising conditions suggest these groups may not be as active going forward, creating a window of reduced competition for other buyer groups, JLL said.