Global direct commercial real estate investment dropped by 21% to $77bn (€58.63bn) over the first quarter this year, down from $97bn (€73.84bn) in the same period last year.
Cross-border capital flows accounted for only 39% of the total volume, a record low since 2010’s third quarter, according to research by Jones Lang LaSalle.
But while the US remained the most active investment market, most inter-regional capital flows were focused on Europe, where 67% of major transactions targeted the more liquid markets.
Based on the research, London has regained its position as the most active city globally from Paris. Activity in the French capital grew considerably in 2011’s last quarter, owing to the expiration of a favourable tax regime at the end of December, which boosted real estate investments as the deadline approached.
According to JLL, an increased interest towards London on behalf of Middle Eastern investors also helped the city replace Paris. “Although the recent economic indicators from the US offer encouragement for global real estate, there remains much to do, as there does across the eurozone,” says Arthur de Haast, lead director of JLL’s international capital group.
“The year ahead will continue to be dominated by government reaction to ongoing economic uncertainty, which global investors will watch with interest. We also expect continued bank deleveraging to attract more private equity funds as they target debt and distressed opportunities in the US and Europe,” de Haast adds.
