London ranked as the top city for global real estate investment in 2017 according to research published by JLL, indicating Brexit uncertainty hasn't affected real estate investment as much as had been feared.
The figures highlight direct commercial investment in London increased by 35% from 2016 to US$33 bn (€27 bn) in 2017, while Los Angeles shifted up to second place in the Top 30 with $23 bn (€19 bn) invested and New York moved into third place with US$21 bn (€17 bn).
Paris was the only other European city ranked in the top ten, remaining in fourth place year on year.
'It may come as a surprise that the London commercial real estate market has stood firm in the first full year after the UK’s decision to leave the European Union,' commented Richard Bloxam, global head of capital markets at JLL. '2018 will see a number of key decisions during the negotiations and will give us a much clearer picture of what the post-Brexit future will look like.'
According to the report, investment activity is poised to continue its strong performance, with the weight of capital seeking to access the sector still significant and investors actively looking for new ways to deploy funds.
Expectations for 2018
Even with an expanding amount of capital targeting real estate, JLL projects that global real estate investment volumes will be 5-10% lower in 2018 as the challenges of finding available assets to purchase, combined with continuing investor discipline, are likely to constrain growth in volumes.
The gap will continue to close between the leading cities (the Big Seven, which includes London and Paris) attracting around a quarter of the world’s investment flows over the past three years. While this will be led by London and New York, the report said that the next tier contenders, which include Amsterdam, are rising to compete with elite cities for capital and businesses.
Meanwhile, established locations which are hubs for science and technology industries, such as Berlin, will continue to strengthen their status as investment destinations.
The report said that despite a widening investment universe and strong growth prospects, many ‘emerging’ cities like Moscow, Mexico City, Manila and Mumbai need to further improve their real estate transparency to increase their attractiveness to investors, who will otherwise continue to gravitate towards cities in more mature and transparent markets.
The latest JLL data shows resilience in the global real estate market, despite geopolitical uncertainty. Transaction volumes reached close to US$700 bn (€567 bn) for the full-year 2017, exceeding the robust levels of 2016.
