JLL has upwardly revised its full-year transaction forecast for global real estate from $650 bn (€477 bn) to $700 bn (€514 bn) for full-year 2014 due largely to increasing allocations from traditional sources of institutional capital.
JLL has upwardly revised its full-year transaction forecast for global real estate from $650 bn (€477 bn) to $700 bn (€514 bn) for full-year 2014 due largely to increasing allocations from traditional sources of institutional capital.
Global direct commercial real estate transactions reached $294 bn (€216 bn) in the first six months of 2014, up 27% over the same period last year, according to JLL's preliminary figures.
Due to the stronger-than-expected performance in both the Americas and Europe, as well as the steady volumes in Asia Pacific, JLL is revising its earlier full-year transaction volume forecast from $650 bn to $700 bn.
'Global commercial property investment markets continue to perform well, spurred on by improving economic data and occupational fundamentals,' said Arthur de Haast, lead director International Capital Group at JLL. 'While we are approaching transactional levels last seen in 2006, the nature of this cycle is very different. The return of fully functioning debt markets over the last 12-18 months has certainly played a part in improving investor sentiment, but the real driver of these increases in transactional volumes is more and more equity targeting direct commercial real estate.'
The greatest growth in global transactional volumes is in the Americas, where volumes have surged by 43% in the first half of 2014 compared to last year. The US continues to be the catalyst, but this quarter it was joined by Mexico and Brazil where industrial and retail portfolio transactions have pushed H1 volumes already well above 2013’s full-year totals for both countries.
EUROPE
European volumes are not far behind in terms of growth with transactions in the first half 34% higher than last year, while Q2 2014 turned in a total volume that was 50% higher than a year ago. An increase in transactional volumes across the region is supporting growth in the core markets. Investment volumes in Southern Europe, the Benelux and Central and Eastern Europe are all more than 50% higher than in the first half of 2013. The growth in transactions is broad-based, with the core markets of the UK, France and Germany also 30% higher over the first half of 2013.
'New sources of capital from emerging economies have grabbed many of the headlines in the last few years. But what is really pushing transactional markets higher currently is the increasing allocations towards direct real estate from the traditional sources of capital; pension funds, endowment capital, private equity, combining in many instances with the new sources to acquire assets,' said David Green-Morgan, Global Capital Markets research director at JLL.