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Jones Lang LaSalle: Global Commercial Direct Real Estate Investment Proves Resilient in 2011

• Preliminary 2011 volumes up 25% on full year 2010 at US$400 billion
• Q4 2011 volumes were 3% higher than Q3 2011
• Q4 2011 was the second US$100 bn+ quarter of the year
• Compared to Q4 2010 investment transactions were down 10% in Q4 2011
• 2012 volumes set to match 2011, but with downside risks



Preliminary numbers from Jones Lang LaSalle’s upcoming 2011 Global Capital Flows report show there was US$400 billion of direct investment into commercial real estate in 2011, a 25 percent increase on 2010.

David Green-Morgan, Global Capital Markets Research Director at Jones Lang LaSalle commented: “Despite the numerous country, regional and global economic headwinds, commercial real estate continued to attract capital from investors who are looking at opportunities not only domestically, but also within their own regions and other regions globally.”

In the fourth quarter of 2011 volumes were 3 percent higher than the third quarter 2011, at US$102 billion.  The US$102 billion fourth quarter was only the third time in the last three years that volumes had passed the US$100 billion mark.  Compared to Q4 2010 direct investment transactions were down 10 percent in Q4 2011.

“Debt in all its forms, deleveraging, bank stability and currency movements will continue to dominate the economic outlook in 2012 as they did in 2011,” Arthur de Haast, Head of the International Capital group at Jones Lang LaSalle said, “sentiment and economic forecasts in Europe imply that we could be in for a difficult year, although in the Americas in particular confidence does seem to be returning on the back of improving economic indicators, while Asia Pacific looks set to continue on its growth path.”

Mr Green-Morgan continued: “In 2011 we recorded a 25 percent increase in transactional activity with the Americas up almost 60% and EMEA up 16% in US$ terms.  Asia Pacific, despite several natural disasters across the region, maintained similar investment levels in 2011 to the strong performance of 2010.”

Mr de Haast concluded: “The on-going deleveraging by the commercial banks will exert positive and negative push and pull factors on the real estate investment market, however, good quality, well-leased commercial buildings in the major cities of the world remain an attractive asset class for many long term investors.”

Jones Lang LaSalle believes that volumes in 2012 will match those of 2011, although downside risks from the Eurozone sovereign debt crisis could have a substantial effect on transactional volumes.
 
– ends –
 
Notes to editors
Table: Global commercial direct real estate investment 2004 – 2011 (US$ billion)
 

Year

Americas

EMEA

Asia Pacific

Total

2004

185

162

46

393

2005

216

212

67

495

2006

283

322

95

700

2007

304

334

121

758

2008

126

167

86

378

2009

45

98

66

210

2010

97

136

85

321

2011

(prelim)

155

161

84

400


Jones Lang LaSalle’s Global Capital Flows analysis provides a set of data designed to help investors understand how commercial real estate capital is moving around the world. The findings are released quarterly, first in the transaction volume analysis represented in this release, and secondly in a broader quarterly report which will be issued in the following weeks. All of the current Global Capital Flows data can be found in interactive website which also acts as a portal for media and clients to access Jones Lang LaSalle’s global capital markets research. Bookmark this site for the most up to date global real estate and data at http://www.joneslanglasallesites.com/gcf

1.       Intra-regional: Both purchaser and vendor originate from the region where the asset is located.  For instance, a US REIT purchasing in Canada, or a German Open Ended Fund selling in the UK.

2.       Inter-regional: Purchaser, vendor or both originate from outside the region where the asset is located. For instance, a US REIT purchasing in Denmark, or an Australian Pension Fund selling in Canada.

3.       Cross-border: Refers to any purchaser, vendor or both that originates from outside the country in which the relevant transaction occurs. Categorised into Inter-regional and Intra-regional transactions.

4.       Domestic: Refers to any investor that originates from within the country in which the relevant transaction occurs. Transactions involving both “domestic” purchaser and seller are referred to as “domestic” activity.

5.       Entity-level transactions, development projects and multi-family residential investment are excluded from our provisional data and may change.

6.       Jones Lang LaSalle converts transaction values into USD at the average daily rate for the quarter in which the transaction occurred. In other words, the foreign exchange effect has not been removed.

7.       Global Funds are funds which raise capital in multiple regions.


Contacts:

Madeleine Little
+65 6494 7003
Madeleine.little@ap.jll.com
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