London accounted for 27% of all cross-regional investment transactions during 2009 and the first half of 2010, according to new research by property broker CB Richard Ellis. The new study explores the degree to which investors making direct commercial real estate investments outside their domestic markets gravitate towards the largest, most liquid commercial property markets.
London accounted for 27% of all cross-regional investment transactions during 2009 and the first half of 2010, according to new research by property broker CB Richard Ellis. The new study explores the degree to which investors making direct commercial real estate investments outside their domestic markets gravitate towards the largest, most liquid commercial property markets.
Not surprisingly, the analysis showed that overall real estate investment activity has been substantially lower during the recovery period of 2009 and the first half of 2010 than during the boom market. On average, investment activity has fallen by over 70%, but the decline in North America has been much greater, while the smaller regions (Africa, Middle East and South America) have seen property investment activity increase.
Looking exclusively at cross-regional investment activity reveals an even steeper decline in activity, from EUR 134.8 bn at the peak of the market in mid-2007 to EUR 22.4 bn in 2009 and H1 2010, a decline of 83%.
The current cross-regional investment landscape is dominated by a small number of major cities. Of the EUR 22.4 bn of cross-regional investment activity recorded over the last 18 months, over EUR 6 bn has been invested in London. This cross-region concentration also made London the world’s most international market, with buyers of 27 different nationalities completing acquisitions in London over that period.
Other major world cities - such as Paris, New York and Sydney - also feature among the top destinations for cross-regional investment. In fact, the top 10 targets for cross-regional capital account for 55% of all activity. This represents a significant increase in the concentration of activity in the largest markets. At the peak of the market in 2006 and H1 2007, the top 10 cities attracted less than 40% of cross-regional investment. This change represents a flight away from any form of risk, CBRE said.