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Global real estate markets to recover slowly: JLL

PropertyGuru

by Cheryl Tay

There is a potential slowdown in the on-going recovery of the global real estate market, according to Jones Lang LaSalle's (JLL) latest Global Market Perspective report. Despite this, a brighter outlook for the global economy will likely strengthen sentiment and full-year commercial real estate volumes for 2012, to match last year's levels.

Investment and leasing volumes for Q1 2012 dropped by around 20 percent compared to the same period last year, attributed to slow response to heightened investor and corporate occupier caution in late 2011.

Additionally, volumes were reduced, due to shortages in high quality lettable space, available investment product and large transactions.

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"Despite the apparent volatility in recorded investment volumes, a strong deals pipeline persists. The weight of capital dedicated to real estate is solid, with further inflows expected from other asset classes," said Arthur de Haast, Head of the International Capital Group at JLL.

He added, "Confidence amongst real estate investors is returning and, while investors remain somewhat cautious, most are still executing their strategies, albeit with longer transaction times."

JLL remains optimistic that full-year global real estate investment volumes can match 2011 levels at around US$400 billion ($S501.3 billion).

Q1 2012's global office leasing volumes slid by a fifth from Q1 2011 levels, as corporate tenants tend to be more selective when it comes to transactions, in order to reduce costs and strengthen balance sheets.

"Despite a slowdown in rental growth over the last quarter, most major prime office markets are expected to register rental uplift in 2012, and some markets such as Beijing, Sao Paulo, Toronto and San Francisco could see double-digit growth."

"At a global level, prime rents are up five percent in Q1 2012 compared to a year ago and 11 percent higher when compared to the bottom of the market at the end of 2009," added the report.

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