CRE Globalization Picks Up Pace in 2014

Commercial real estate transaction volumes on a global scale are up 23 percent year over year, reaching $130 billion, according to JLL.
David Green-Morgan, JLL

David Green-Morgan, JLL

Commercial real estate transaction volumes on a global scale are up 23 percent year over year, reaching $130 billion, according to JLL.

This is predicted to be the topic that will be on the minds of investors at Urban Land Institute’s Spring 2014 Conference taking place this week in Vancouver, British Columbia.

“Commercial real estate continues to attract capital away from other asset classes, especially those offering low yields,” David Green-Morgan, director, Global Capital Markets Research at JLL told Commercial Property Executive. “In addition, new sources of capital continues to enter the marketplace, which is creating an ever more competitive landscape.”

Both American and European markets were up the same period last year, with Americas volumes in the first quarter surging by 61 percent, boosted by the growing U.S, market where domestic and foreign capital is joining and competing for opportunities, which saw the first quarter up 63 percent compared to a year ago, despite the unwinding of the QE3 policy.

“U.S. results outperformed the rest of the globe, growing by circa 60 percent from a year earlier.  Being the largest single market globally, the U.S. is benefiting from a return of risk appetite and a liquid financial market that is able to match equity with debt,” Green-Morgan added.

Volumes in Europe are also up 14 percent in the first quarter compared to last year, with the earlier stagnant markets of Ireland, the Netherlands, Spain and Portugal all seeing meaningful growth year over year. While the U.K. and France were up slightly, activity in Germany was 50 percent higher than a year ago, as major portfolio deals have returned, with international and domestic groups grabbing into opportunities in Europe’s largest economy, according to the release.

“We don’t believe we are in a bubble as transactional volumes are still well below the previous peak in 2007,” Green-Morgan concluded. ” For 2014 we expect transactional volumes to be U.S. $650 billion, an approximately 15 percent rise on 2013.”