Global real estate investment volumes surged in 4Q 2012, according to Jones Lang LaSalle capital markets research from 60 countries, with US$141 billion traded, bringing the year's total preliminary volume to $436 billion. Adhunter
2012 saw a small increase in real estate investment volumes over 2011's $435 billion, and a 36 percent increase over 2010.
A yearend rush of US investors looking to move cash to avoid capital gains taxes as a result of the government's "fiscal cliff" crisis contributed to the excellent quarter. Volume in the United States increased by 51% from the previous quarter. Mexico, Canada, France, Germany, and the Nordic nations all had a solid year.
Jones Lang LaSalle's Arthur de Haast, Head of the International Capital Group, stated, "The increase in the fourth quarter of the year shows that real estate markets are well past the recovery stage of the cycle and are now sustaining year-over-year gains in transactional volumes. According to this evidence, 2013 will be another year of expansion, with worldwide volumes expected to reach between $450 and $500 billion."
The following are some of the key points from the Jones Lang LaSalle report:
Preliminary global volumes for 2012 exceeded expectations, ending at $436 billion, a small increase over 2011's $435 billion and a 36% increase over 2010.
Globally, $41 billion was spent in the fourth quarter of 2012, compared to $100 billion in the third quarter and $119 billion in the fourth quarter of 2011.
In a low-yield, high-liquidity environment with below-trend economic growth projections for 2013, direct real estate ownership is proving appealing.
As vendors worry about capital gains tax rises and the need to allocate cash, the "fiscal cliff" and pent-up demand drives U.S. volumes up 51 percent quarter over quarter, 34 percent higher than 4Q 2011 and 11 percent higher year over year. Canada and Mexico both had a better year in 2012 than in 2011, indicating that the Americas are growing.
With weaker economic development in China hurting volumes in the second largest market, Asia-Pacific has a consistent conclusion to the year, but full-year volumes are down marginally in 2012 at $92.5 billion compared to $98 billion in 2011.
Europe exceeded forecasts by equal 2011 in Euro terms, but was 8% lower in US$ terms, owing in part to a weak Euro. In 2012, the United Kingdom remained the most active market, and activity on the continent grew in Q4, with France, Germany, and the Nordics reporting stronger year-end results.
Jones Lang LaSalle expects full-year 2013 volumes to be between $450 and $500 billion, based on the better-than-expected end to 2012, with performance back ended following a similar pattern to 2011 and 2012. In the Americas, momentum will be maintained, with Asia Pacific predicted to grow and EMEA expected to perform similarly to 2012.
Global Capital Markets Research Director David Green-Morgan added, "Increased real estate allocations from a number of institutional and private equity firms are beginning to have a tangible influence on the global real estate investment market. The possibility of rising capital gains taxes in the United States prompted a flurry of year-end deals, but the underlying issue is real estate's appeal in a low-yield, high-liquidity market. Despite the fact that worldwide values have improved over the last three years, we are still 15 to 20% below the market top. There is still a lot of room for growth, especially in secondary markets, which have been relatively quiet since the financial crisis but are beginning to draw investor attention due to their higher yields."