Global CRE Investment Surges in Q3: CBRE

South Korea, Taiwan and the U.K. are leading the recovery, according to CBRE's latest Global MarketFlash.

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While the volume of global commercial real estate investment still pales in comparison to last year’s, third-quarter transactions increased 23 percent from the previous quarter, according to a new report from CBRE.

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The firm’s Global MarketFlash report attributed the gradual recovery in large part to effective management of the COVD-19 pandemic, with the South Korean, Taiwanese and U.K. markets leading the rebound. As the market adapts to the impact caused by the pandemic, investors are heavily favoring industrial and logistics assets, while office assets were less popular.

A recent NAIOP survey also showed an increase in industrial, office and multifamily deals in September, but found that the retail sector continues to struggle to attract investor interest.

Overall commercial real estate investments, however, are still down 48 percent year-over-year compared to 2019 and down 31 percent year-to-date.

The uptick in activity brought global property sales up to $147 billion. The Americas saw a 30 percent quarter-over-quarter increase in investment volume to $64 billion., with the U.S. accounting for 96 percent of the deals. Comparatively, the Europe, Middle East and Africa regions’ investment volume increased by 11 percent quarter-over-quarter to $57 billion, while the Asia-Pacific region saw a 38 percent increase quarter-over-quarter to $26 billion.

A potential post-COVID-19 forecast

As the rate of COVID-19 infections in Asia slowed down significantly, investor sentiment in those markets has grown. Markets like South Korea and Taiwan tackled virus containment effectively and have led the region’s third-quarter recovery.  Europe has also seen a similar growth pattern in the third quarter, but the threat of a second wave in countries like France and Italy could hamper the region’s recovery. And despite the rebound in the Americas, investors are still in a period of price discovery and risk aversion.

In the near future, CBRE expects a modest recovery in the global real estate investment market until a vaccine for COVID-19 is available and widely distributed. As the prospect of a vaccine is unlikely to happen in 2020, CBRE anticipates that investment will remain relatively weak in the next quarter.

However, CBRE expects a global market normalization in 2021 due to the progress made in vaccine research. The report added that investors who opted out of investing any capital in 2020 will instead look for risk-adjusted opportunities or adopt different strategies in 2021 and beyond.

Read the full report by CBRE.

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