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AUSTRALIA, 8 November 2012 – Jones Lang LaSalle’s Global Capital Flows Report for Q3 shows four Asia Pacific cities featured in the Global Top Ten Cities for real estate investment and Australia was the 6th most active investment market in the Asia Pacific region.
According to the firm’s new Global Capital Flows report, year to date volumes in Asia Pacific this year are in line with 2011 numbers; with US$71 billion transacted in the first three quarters of 2011 and US$70 billion this year to date. Four of the most active cities in the first three quarters of 2012 were in Asia Pacific: Tokyo, Hong Kong, Seoul and Singapore.
Globally there was US$100 billion of direct investment in commercial real estate in Q3 2012, a dip of around 6-7 percent when comparing quarter on quarter, Q3 2012 to Q3 2011 and also when comparing the first nine months of this year to last. In Q3 the Americas accounted for US$44 billion and EMEA US$33 billion.
Stuart Crow, Head of Asia Pacific Capital Markets, Jones Lang LaSalle said: “While transaction activity has slowed in some markets around the region due to subdued economic growth forecasts, transaction volumes in Australia improved 17 percent year on year on the back of higher yields. China remains very active, as does Hong Kong and Japan, and we see the strong REIT markets supporting further activity across the region. At the same time, large global sovereign and pension funds are returning their focus to Asia Pacific and we maintain our expectation for full year 2012 volumes in Asia Pacific to reach US$88 billion, compared with US$98 billion in 2011.”
Cross border purchasers accounted for US$3.7 billion of transactions during the quarter in Asia Pacific, or 16 percent of total investment in the region. Of this cross border investment, US$2.3 billion came from purchasers outside of Asia Pacific. This was buoyed by a large investment of US$1.04 billion (AUD$1 billion) from the Canadian Pension Plan Investment Board (CPPIB) into the Barangaroo mixed use project in Sydney.
Managing Director, Investments & Advisory, Australia, John Talbot said, “The figures show that transaction volumes in Australia in Q3 2012 increased 17% on the same quarter last year.
“Figures for the office, retail and industrial sectors for the first three-quarters of this year showed national commercial sales volumes are currently tracking ahead of last year’s figures. Volumes as at Q3 2012 were $12,071,462,739 compared to full year sales in 2011 of $12,094,486,965.
“That’s a solid result in light of the difficult business environment that has prevailed this year. We are operating in a more cautious global economic environment in 2012 compared with 2011,” said Mr Talbot.
Jones Lang LaSalle has also issued a new Global Market Perspective, a quarterly piece that identifies the global economic forces on property markets worldwide. The fourth quarter issue points to a divergent leasing and investment market.
Head of Office Investments Australia, Simon Storry said Australia followed global trends in Q3.
“Investment activity was robust while leasing activity was subdued. The high transaction volumes reflect, in part, the weight of money seeking exposure to prime grade real estate assets. In Australia this trend is underlined by the high level of offshore interest. Over the first three quarters of 2012, offshore investors accounted for 34% of all transactions. This compares to 25% for the full year 2011. There is no sign that this inflow will diminish as we move into 2013,” said Mr Storry.
The key highlights from the Fourth Quarter 2012 Global Market Perspective include:
Investment volumes: US$100 billion of capital transactions registered in Q3 - a consistent pattern emerges.
Capital Markets outlook: On track to achieve US$400 billion investment volumes for full-year 2012. US$100 billion per quarter to continue into 2013, with upside potential.
CMBS: CMBS activity in the United States is on track for post-recession high.Office leasing subdued: Office leasing volumes weaken globally as corporate occupiers adopt a holding pattern and delay real estate decisions in the face of economic uncertainty. Global leasing volumes for full-year 2012 are expected to be 15 percent below 2011. Net absorption, a measure of expansion demand, is likely to be down 20 percent for full year 2012 vs. 2011.
Vacancy edges downwards: Global office vacancy rate continues to edge downwards, and currently stands at 13.2 percent - helped by very low levels of new office deliveries in the United States and Europe.
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