Economy Watch: RE Investment Volume Had Strong 2015

A recent JLL report shows no signs of a slowdown in global real estate investment, with top cities accounting for a large chunk of total investments.

Total direct real estate investment worldwide reached just over $700 billion in 2015, almost as much as in 2014, according to a recent report by JLL. Back in 2014, total investment was about $704 billion. So far (at least in nominal terms), investment hasn’t been able to top the all-time high of $758 billion just ahead of the recession, in 2007.

As usual, the pattern of investment is lopsided. The top-30 cities in the world accounted for almost half of total investment in real estate in 2015. Moreover, the United States’ safe-haven reputation seems to be intact, with U.S. cities accounting for nearly half of the top-30 cities. Seattle, San Diego and Miami enjoyed sharp growth in investment activity and re-entered the top 30.

Even so, New York is the place for the investment capital inflow, JLL reported. Investor demand for assets there reached a new record in 2015, with New York overtaking London in investment levels. And at $92 billion, these two cities combined accounted for 13 percent of global RE investment activity in 2015.

There’s also strong investor interest in what JLL calls ‘New World Cities,’ which are: small- to medium-sized; have a favorable infrastructure and livability; and have achieved global reach through specialization in one high-performance industry or another. Such cities include San Francisco, Seattle, Munich, Miami and Melbourne. A set of 32 ‘New World Cities’ now account for over 20 percent of global real estate investment, compared to about 10 percent in 2006.

JLL further predicts growth ahead for the pace of investment, noting that the world is on track to average $1 trillion per year by the early 2020s.