Investors seek security in real estate: JLL

Real estate transaction volumes have been resilient so far in 2012 as investors opt for the perceived security offered by property assets, according to Jones Lang LaSalle's latest capital markets research.

Preliminary data collected from more than 60 countries by Jones Lang LaSalle's capital markets research team reveals real estate investment volumes up 10% at $103 bn (EUR 84 bn) during April to end-June compared to the first quarter as investors continue to move away from equities and towards other assets.

All regions recorded an increase in activity in Q2 compared to Q1. However on a year-on-year basis the picture is more mixed with only Asia Pacific showing growth in investment volumes.

In contrast to the fragile market in the first half of 2010, investor sentiment is much more optimistic and this is reflected in volumes being up by more than 50% in H1 2012. However, the positive attitude of the first half of 2011, when government stimulus was in full swing globally, has not been sustained in the face of continuing debt and economic growth concerns and volumes are down 9% on H1 2011.

Arthur de Haast, head of the International Capital Group at Jones Lang LaSalle, said: 'Clearly we remain in a challenging environment. However, the demand for good quality, well located direct commercial property remains high globally as evidenced by the rising transactional volumes this quarter. In the light of ever diminishing yields from other asset classes the potential income returns offered by core, prime commercial property are attractive to many investors.

'Even in Europe, the eye of the economic storm at present, we continue to see strong demand for the best properties as witnessed in the recent purchase by the Malaysian pension fund PNB of two London properties from the KanAm portfolio above the reported book value of EUR 590 mln.'