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Commercial real estate investment falls to lowest levels since 2004

Just $435bn was invested worldwide in commercial property in 2008, according to Cushman & Wakefield, down 59% from $1tn in 2007. Those figures are expected to fall again in 2009. Emerging markets were the most resilient though - with China now the world's second most popular country for investment.

Investment in commercial property globally fell 59 percent last year to its lowest level since 2004 – down to $435 billion from the $1.05 trillion peak of 2007.

The pace of investment is not expected to rise in 2009, however, with Cushman & Wakefield’s Investment Atlas report warning the figures will fall again in 2009 – to around $412 billion.

The real estate services firm said the largest drop-off in activity in 2008 was seen in North America where investment fell 73 percent to $116 billion from $437 billion in 2007.

European investment declined 52 percent over the past year, while Asia declined 45 percent. North America has now ceded its position as the top global investment target, and is now in third place behind Europe and Asia.

The most resilient regional market in the world was Latin America, where investment fell by just 9 percent to $8.9 billion.

The most popular countries for investment capital were the US, accounting for 25 percent of all global investment at $107.1 billion; China, accounting for 12 percent of all global investment at $50.3 billion; and the UK, accounting for 9 percent of all investment capital at $37.1 billion.

The UK was followed by Japan and Germany, which each accounted for around 7 percent of investment capital at $29.3 billion and $28.8 billion respectively.

David Hutchings, head of research at Cushman, said mature markets had suffered the most in the economic downturn, with emerging markets becoming increasingly dominant in attracting real estate investment dollars.

“On average, mature markets are now probably at least half way through the pricing correction. Globally however, it is likely to be those countries which fell first that will also be the first to recover,” he said in a statement.

Asia, he added though was “set for a further drop in activity” in 2009 before prices corrected sufficiently to “draw in more investors”.