Global commercial real estate investment volume rose from Q1 2019 across all countries, but overall dropped by 7.5 percent year-over-year in Q2 2019, including entity-level transactions, according to commercial real estate advisor CBRE. Only the Americas region saw an increase year over year (0.7 percent ). In EMEA, activity was down 17% from last year, and in APAC, activity was down 14%. buy and sell qatar
In the first half of 2019, global investment volume totaled $428 billion, down 10.6% from the same period last year. Nonetheless, with the US economy showing signs of improvement and central banks lowering interest rates, the second half of the year looks promising.
Highlights of Commercial Real Estate Investment in the Second Quarter:
In the second quarter of 2019, global commercial real estate (CRE) investment totaled $231 billion, up 17% from the previous quarter but down 7.5 percent from Q2 2018.
The Americas, EMEA, and APAC markets all saw an increase in investment in Q2 but a decrease in H1 operation compared to the same time last year, owing to fewer ultra-large transactions and a scarcity of high-quality assets for sale.
Strong leasing activity fueled renewed investor interest in office properties.
Despite a rise in office purchases, investment in the industrial and hotel sectors has slowed. In the United States, the multifamily sector was the most involved.
Richard Barkham, CBRE's Global Chief Economist, tells The World Property Journal, "The Americas, EMEA, and APAC markets all saw an increase in commercial real estate investment in the first quarter, but a decrease in H1 activity compared to the same time last year, owing to fewer ultra-large transactions and a scarcity of high-quality assets for sale. The economy in the United States has improved somewhat, and central banks have lowered interest rates, so the outlook for the rest of the year is positive. The continued strength of the US economy, combined with global fiscal expansion and monetary easing, could help a stronger second half of global investment activity."
The turnaround in Q2 was fueled by resurgent office investment in gateway markets. The value of transactions increased by more than 50% year over year in Berlin, Tokyo, Boston, and San Francisco. While most property sectors had fewer large-ticket transactions, the office sector led with deals exceeding $100 million. This is most likely due to the continued high demand for high-quality office space among occupiers as a result of strong job growth. Investors want stable trophy assets to secure cash flows and future slowdown defense as the global economy enters the 11th year in what is officially the longest period on record.
In Q2, the Americas were the only global region to see an increase in investment volume year over year (+0.7 percent to $128 billion). In the first half of 2018, the Americas' transaction volume was $235 billion, down 5% from the same span last year. Year-to-date, the United States has accounted for 53% of global CRE investment, with multifamily and office investments accounting for 67 percent of overall U.S. transactions in Q2.
Due to lower economic sentiment, entity-level transactions cooled, especially in the industrial and retail sectors. Transactions in the United States increased by 3.4 percent year over year, including entity-level transactions, and 7.7 percent except entity-level transactions.
Cross-border investment in the United States increased as hedging costs for US-dollar-denominated assets fell, owing to investors from Canada, Israel, Germany, and the United Arab Emirates. Mexico and Brazil gained from cross-border investor activity from the United States and France.
In Q2, EMEA investment volume totaled $74 billion, down 17% year on year. Investment volume dropped sharply in the United Kingdom (-50%), the Netherlands (-35%), and Germany (-36%), but increased in smaller markets such as Italy, Poland, and Belgium. EMEA investment volume was $136 billion in the first half of the year, down 19 percent from the same period last year. The United Kingdom and Germany accounted for about 65 percent of EMEA's reduced volume. France kept the same amount of money in the bank as it did in the first half of 2018.
In some parts of Europe, investment activity is picking up, especially in the office and residential sectors. However, a lack of high-quality product on the market is a constraint, and there is still confusion about the EU's rent-control policies, which could dampen consumer interest in the residential sector.
In Q2, APAC investment volume totaled $29 billion, down 14% year on year. The region's first-half sum of $57 billion was down 10.5 percent from the same span last year. Despite the slowdown, Japan (+79%), Singapore (+73%), and South Korea (+11%) accounted for half of the region's investment amount in the second quarter. As a result of slower economic growth and uncertainty, investment volume fell significantly in Hong Kong (-64%), Mainland China (-33%), and Australia (-23%). In these markets, the office sector took the brunt of the blow.
Asia has grown in popularity among investors in the Americas and EMEA. Just 7.5 percent of Asia's overall investment came from outside the country in the first half of 2018. Cross-regional capital inflows hit 11% in the first half of 2019. Westerners' CRE investment in China and Singapore increased by 329 percent and 71 percent, respectively, in H1 2019 compared to H1 2018, surpassing $3.7 billion. One of the main drivers of Asia's rise in foreign investment was currency weakness in China.
CBRE predicts a single-digit percentage point decrease in global CRE investment in 2019 compared to 2018. H1 2019 volume was 10.6% lower than the same time the previous year. The continued strength of the US economy, combined with global fiscal expansion and monetary easing, could help a stronger second half of investment activity. The negative sentiment around a possible "strong Brexit" and prolonged trade tensions, on the other hand, is a significant constraint.