The Hindu Business Line : ‘Global real estate investment volumes likely to decline’

Mumbai, April 10 Real estate management and services firm Jones Lang LaSalle expects global investment volumes to be down by over 30 per cent in 2008, after a record year in 2007 when volumes were up eight per cent year-on-year to $759 billion.

Asia may be more resilient, though volumes will not achieve 2007 levels, its latest global real estate capital report said. Jones Lang operates in over 700 cities in more than 60 countries.

Mr. Tony Horrell, International Director and Head of European Capital Markets, said reduced debt availability and investor confidence were likely to stay for much of the first half of 2008 as the impact of the debt squeeze continues to ripple through markets, and central bankers and financiers work to stabilise and stimulate the debt markets. “We do not expect a strategic and planned withdrawal of capital from real estate in 2008, or investors to significantly adjust their allocations to the asset class. Forecasts for 2008 remain positive and the long-term trends in real estate continue to be positive drivers.”

Whilst domestic investment remained at about $400 billion globally in 2007, similar to 2006 volumes, cross-border investment (purchaser, vendor or both are from outside the country where the asset is located) increased by $58 billion to $357 billion in 2007 and of that, inter-regional investment (purchaser, vendor or both are from outside the region) accounted for $242 billion.

Asia Pacific

Direct commercial real estate investment reached a record $121bn in 2007, up 27 per cent on 2006. Japan, by far the largest market in the region, accounted for 50 per cent of the total transactions.

Mr. Stuart Crow, Head of Asia Capital Markets, said, “We are seeing a definite shift in the origin of active investors. While the Australian Listed Property Trusts (LPTs) played a large part in the buying activity in 2007 within the region, equity market dynamics at home are making it difficult for many of these funds to make accretive acquisitions outside of Australia. Instead, we are witnessing the re-emergence of Japanese interests in overseas investments, particularly in the developing markets of China, India and Vietnam.”

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