Continued demand for real estate will see global investment volumes this year increase by 22 percent to reach levels close to their previous 2007 peak of $791 billion, according to research published Monday by global real estate services company DTZ.
Current investment in commercial property has already grown “sharply” in the first half of the year to reach $318 billion, 15 percent higher than the first half of last year, the report said.
But, the growth story masks differences among the regions. Over the last 12 months, European volumes rose 23 percent to $274 billion and in North America, volumes increased by 18 percent to $311 billion. In contrast, the Asia Pacific region was 7 percent lower on the same period a year ago, at $90 billion over the last twelve months.
“In contrast to Europe or North America, investment volumes across Asia Pacific remained strong through the financial crisis and its aftermath. They hit a peak of $104 billion at the end of 2014 but in the last six months, activity has been stifled by a lack of suitable product and, in some markets, a mismatch between buyer and vendor expectations,” commented Nigel Almond, head of capital markets research at DTZ.
At the city level, London retains its position as the most traded market, with more than $39 billion transacted in the 12 months to the end of Q2 2015, 7 percent higher than a year ago. Manhattan was the next traded market at nearly $28 billion, followed by San Francisco at $21 billion.
Tokyo, at $18 billion, was the most traded Asian market and fourth largest globally, although volumes were flat compared to the same period a year ago.
In terms of real estate buyers, North American and Chinese investors remain the most active, alongside capital from global funds. Norwegian, Qatari and Taiwanese capital is also growing in strength, the DTZ report added.
“Despite prime yields edging towards new lows in many markets, the attractiveness of real estate remains in the low interest rate environment,” said Almond.