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Outbound capital from Asia Pacific into real estate grows steadily in H1, despite concerns over tightening measures

Direct commercial real estate investment flows into Europe 18 percent higher year on year – driven by China and South Korea

  • USD121 billion was invested directly into commercial real estate globally in Q2 2013, up 16 percent from the first quarter.
  • Transaction volumes reached USD225 billion over the half year with Asia Pacific seeing the strongest growth y-o-y at 21 percent.
  • Continued net flow of capital out of the Americas and Asia Pacific into Europe. The net flow of overseas capital into European commercial real estate in H1 2013 rose by 18 percent y-o-y, to top USD 12 billion with Asia Pacific investors deploying USD5.6 billion.
  • London remains most actively traded city, receiving 60 percent of overseas capital into Europe in H1 2013 although investors are increasingly looking higher up the risk curve into secondary cities
  • US investors remain most active purchasers of property globally and demand is proving increasingly higher than supply with USD7 of capital pursuing every USD1 of prime product.
  • Download the latest Global Capital Flows infographic 

chicago, london, SINGAPORE, 1 August 2013 – Direct commercial real estate investment globally reached USD121 billion  in the second quarter of 2013, according to Jones Lang LaSalle’s latest Global Capital Flows Report released today, a 16 percent increase from the first quarter of the year and 10 percent higher than Q2 2012.  Volumes came in at USD225 billion for H1 2013, with all three regions experiencing growth year on year, as concerns over monetary tightening measures failed to deter sentiment.

Increased cross-border activity

Over the first half of the year, cross border activity has grown by to USD71 billion (13 percent up on H1 2012) to total 42 percent of all transactional activity. The report shows that net inter-regional flows from the Americas and Asia Pacific into Europe over the first half of 2013 increased by 18 percent from H1 2012 to top USD 12 billion.  While the larger markets such as the UK, Germany and France experienced some of the highest levels of global cross-border activity, capital is becoming increasingly wide-spread across the continent as investors look further up the risk curve for higher yields. Yet, despite this increased appetite for risk, the report shows that investors are still focussing the majority of their money into quality assets in prime locations with USD7 of capital pursuing every USD1 of prime product.

Asia Pacific accounted for the highest level of this overseas investment with USD8.5 billion of capital from the region being directed into the European and US commercial real estate market in H1 2013 as investors seek diversification. Driving the growth of inter-regional investment out of Asia Pacific is South Korea and China where overseas buying activity has more than doubled from both countries in the first half of this year compared to H1 2012.
Arthur de Haast, Lead Director, International Capital Group at Jones Lang LaSalle said: “Asia Pacific and the Americas are seeing continued growth in investor appetite for direct commercial property, however, in contrast to what we witnessed last year, both new and experienced investors are taking on additional risk. This has led to increased capital into secondary cities, particularly in Europe and the US. This more broad based activity should continue and will sustain volumes over the second half of the year, which is traditionally busier than the first, maintaining our forecasts of USD450-500 billion for the full year 2013.”

Alistair Meadows, Director, International Capital Group Asia Pacific, Jones Lang LaSalle commented: “We continue to see new capital emerge from Asia Pacific, as investors look to diversify their portfolios into prime global cities such as New York and London. Over the past six months, Chinese and South Korean investors have driven this growth, especially in the residential and office sectors, and we expect emerging market institutional capital to be a major theme within commercial investment markets for many years to come.”

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Notes to editors

1. Download the full report here

About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. With annual revenue of $3.9 billion, Jones Lang LaSalle operates in 70 countries from more than 1,000 locations worldwide. On behalf of its clients, the firm provides management and real estate outsourcing services to a property portfolio of 2.6 billion square feet and completed $63 billion in sales, acquisitions and finance transactions in 2012. Its investment management business, LaSalle Investment Management, has $46.3 billion of real estate assets under management.
Jones Lang LaSalle has over 50 years of experience in Asia Pacific, with over 26, 100 employees operating in 79 offices in 14 countries across the region. The firm was named ‘Best Property Consultancy’ in nine Asia Pacific countries at the International Property Awards Asia Pacific 2012, in association with HSBC, and was named the number one real estate advisory firm in Asia Pacific in the Euromoney Real Estate Awards 2012. 

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