Europe sees highest volume of cross-border activity: JLL

The near doubling of global commercial real estate transactions in the first half of 2010 compared to the same period a year ago was underpinned by a return to pre-crisis levels of cross-border investment, according to new research from Jones Lang LaSalle. Total global commercial real estate investment totalled $132 bn (EUR 101 bn) for the first half of 2010 compared to $76 bn in H1 2009.

Europe had the highest volumes of cross-border activity in the first half of 2010, as over 54% of European transactions were cross-border, of that 24% was inter-regional. The Americas transactions, historically driven by strong domestic investors, recorded the highest proportion of inter-regional investment of all three regions. Over 35% of all the Americas transactions were inter-regional. Asia Pacific transaction volumes were up 40% in the first half of 2010 compared to the first half of 2009; 69% of transactions in Asia Pacific were domestic and, of the 31% cross-border transactions, 15% were inter-regional.

Richard Bloxam, Head of Pan-EMEA Capital Markets at Jones Lang LaSalle, commented: 'After the retrenchment in 2008 and 2009 of many investors to their domestic markets, 2010 has seen a bounce back to pre-crisis proportions of cross-border activity. Total volumes, whilst recovering markedly year on year, remain subdued in comparison to 2007. Much inter-regional activity has targeted London and latterly Paris and we are currently witnessing increasing interest in Germany. Intra-regional investment in EMEA has also seen a strong recovery, particularly of the larger lot sizes and shopping centres as institutional demand and available debt continue to return to real estate; particularly for the more prime assets.'

After reaching a low of 31% of global total volumes in the first half of 2009, cross-border activity is now back above 40% (43%), a trend set to continue for the remainder of 2010. JLL said that this reflects a general market pick-up as confidence improved, a return to the globalisation of real estate investment and a search for value by investors.

Looking ahead to the rest of the year, Arthur de Haast, head of the International Capital Group at Jones Lang LaSalle, commented: 'Mixed economic news plus longer transaction processes due to investor due diligence may mean that investment volumes do not continue to grow at levels seen in the first half 2010. However, full year volumes will be between $275 - 300 bn for 2010, significantly ahead of 2009 ($209 bn), with cross-border investors continuing to be very active.'