Global investment up 36% in Q3 despite sovereign debt crisis

Global direct real estate investment volumes in the third quarter of 2011 totalled $99 bn (EUR 72 bn), up 36% on the same period in 2010, according to figures released on Thursday by Jones Lang LaSalle.

In the first nine months of 2011, investment activity increased by 43%, with total transaction volumes amounting to $297 bn, compared to $208 bn in the same period last year.

Despite heightened economic and sovereign debt concerns, European transaction volumes have held up well, with a total of $41 bn in Q3, an increase of 14% on the last quarter and a 38% rise on Q3 2010. The UK, the largest market in Europe, saw a marked improvement in Q3, in part due to deal completions delayed from Q2. Germany, France, Scandinavia, Poland and Russia all continue to attract strong investor interest, with 'safe haven' status and relative GDP growth considerations prevalent.

In Asia Pacific, transaction volumes amounted to $20 bn in the third quarter. This represents an 8% rise on the previous quarter, and a 3% increase on the third quarter 2010. The Americas saw a slowdown in the third quarter with volumes down 22% compared with what was a very strong second quarter. Investment reached $38 bn, up 60% on the same period last year.

'Real estate fundamentals remain relatively strong and the asset class has gained favour compared to equities and bonds,' said Arthur de Haast, head of the International Capital Group at JLL. 'However, debt finance is harder to come by than earlier in the year, and the expected growth in interest in secondary product has stalled as investors take refuge in core, well-let product in specific markets. The market remains very much sentiment-driven and the mood is cautious, resulting in delays in closing deals and volatility in transaction volumes quarter-on-quarter.'