Global Investment Could Hit $290B for Year: Jones Lang LaSalle

Photo courtesy of Flickr Creative Commons user problemkind

By Paul Rosta, Senior Editor 

Heading into the home stretch for 2010, global real estate investment is on track for a 35 to 40 percent increase compared to last year, Jones Lang LaSalle Inc. reported today.

All told, investment for the year could hit $280 billion to $290 billion. Despite a general leveling off between the second and third quarters, transactions reached $202 billion by the end of October, up from $139 billion at the same time last year. And the outlook for 2011 is more of the same, predicted Arthur de Haast, head of the firm’s international capital group.

“Further growth in volume is anticipated in 2011, with cash-rich investors widening their geographic search, pushing into value-added opportunities and eventually into secondary stock,” de Haast commented in a statement disclosing the findings. He further cited a worldwide pattern of investor interest in well-located prime assets. For instance, investors from 45 nations have flocked to London so far in 2010, a turnout that Jones Lang LaSalle projects will increase transaction volume 20 percent, to $15 billion.

Confirming widespread impressions that the U.S. investment market is also gathering steam, the company reported that transaction volumes are already up 50 percent compared to 2009—24 percent in the third quarter alone. By year’s end, transactions could soar to $85 billion or $90 billion, a level that would represent a 90 percent increase compared to 2009.  Demand could even start expanding beyond primary markets. “A broad range of domestic investor types are now actively looking for prime product, and in some cases, they’re now willing to review secondary markets to achieve higher return requirements,” said Steve Collins, head of the firm’s international capital group for the Americas, in a statement.

In other highlights:

•  Americas: Investment rose 12 percent in the third quarter. Despite the continuing comeback in the U.S. market, the biggest story for growth continues to be Brazil. Betting that the nation’s bold economic growth will continue, home-grown and foreign investors have combined to triple sales so far this year.
• Europe,  Middle East and Africa:  Investment slipped 12 percent from the second and third quarters to $27 billion. Nevertheless, Jones Lang LaSalle projects a 30 percent year-over-year increase. In Europe, upticks in Sweden and France will offset slowing in other major countries, United Kingdom, German, Spain and Italy. London’s example indicates that investors are still chasing prime assets.
• Asia Pacific: Transactions are on the way to rising between 15 percent and 25 percent year-over-year, which would translate to $77 billion in volume. Volume rose 12 percent from the second to third quarters, led by increases in Singapore, Australia, China and Malaysia. For 2011, Jones Lang LaSalle expects capital to continue its steady flow from Asia to the top markets in Europe and the U.S. During the first half of the year alone, investors sent $1.1 billion to Europe,  making London a favorite location.