With a Boost from U.S. Market Activity, Global Investment Volumes to Reach $478B

It is no secret that worldwide commercial real estate investment volumes took a nosedive in 2009. However, last year's lackluster level of activity will be just a bad memory given the positive 2010 forecast detailed in Cushman & Wakefield's 2010 Global Investment Atlas, which the commercial real estate services firm launched March 16th at the annual MIPIM world property market conference in Cannes, France.

March 17, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user Sudhamshu

It is no secret that worldwide commercial real estate investment volumes took a nosedive in 2009. However, last year’s lackluster level of activity will be just a bad memory given the positive 2010 forecast detailed in Cushman & Wakefield’s 2010 Global Investment Atlas, which the commercial real estate services firm launched March 16th at the annual MIPIM world property market conference in Cannes, France. With a predicted 30 percent investment increase representing $478 billion for this year, the bad times are not over, but things are looking up.

In 2009, global investment volumes plummeted 23 percent to $365 billion, a low not seen since 2003, according to the Cushman & Wakefield report. However, with an anticipated 30 percent jump in volumes for 2010, the eagerly awaited turnaround is apparently afoot. The signs began to emerge last year, with the Asia Pacific region, China in particular, leading the way. China now ranks number one, having seen a 143 percent boost in investment in 2009. The spike was spurred by government land sales and regulatory changes that smoothed the way for banks and insurance funds to directly invest in the real estate market.

The U.K. followed China, grabbing the second-place spot from the U.S., which suffered a staggering 64 percent drop in volumes. However, 2010 is looking better for the U.S. Cushman & Wakefield anticipates that the country will experience a 50 percent rise in activity, one of the strongest increases expected across the globe.

“The US market remains a Tale of Two Cities, divided between institutional sellers, who were on the sidelines in 2009, and distressed sellers–special servicers and bank REO groups–who have been reluctant to bring product to market and lock in losses,” Frank Liantonio, Executive Vice President with Cushman & Wakefield, noted in the report. “As 2010 unfolds activity in both sectors should improve as pricing for well leased, core product purchased before the market peak benefits from large pools of frustrated capital, and distressed sellers begin to deal with a mounting volume of properties.”

Latin America will make its contribution to the projected worldwide increase in investment, as well. Transactions are on target to grow 40 to 50 percent, led predominantly by Brazil, which is buoyed by substantial internal demand, its relative risk profile and desirable yields. In Asia, China and Japan will spearhead a forecasted 20 percent volume increase. Additionally, transactions are on course to increase in the Middle East, as moneyed funds and individual investors go on the hunt for opportunities.

Overall, the right elements are in place to support a rebound in investment activity on a global level. “While challenges clearly remain and a double-dip can not be ruled out, a higher risk appetite among financiers and investors will continue to fire the market,” said David Hutchings, head of EMEA research at Cushman & Wakefield. “With the recovery now backed by local and international players, we anticipate higher levels of activity.”