Worldwide commercial property deals rise in second quarter to US$121b

PUBLISHED : Wednesday, 07 August, 2013, 12:00am
UPDATED : Wednesday, 07 August, 2013, 3:48am

Commercial property worldwide continued to benefit from accelerating inflows into the sector in the second quarter, with the total value of transactions rising 16 per cent from the previous quarter to US$121 billion, according to property consultancy Jones Lang LaSalle.

The firm's Global Capital Markets Research unit tracked transactions for offices, shops, hotels, and industrial- and mixed-use properties valued at more than US$5 million.

It said strong growth helped propel the value of deals done in the first half to US$225 billion - up 12 per cent compared to the first six months of last year.

"After a mammoth fundraising effort last year, global funds are now in acquisition mode as they start to put their money to work. Purchasing activity in the first half is 31 per cent higher than last year, but in terms of year-on-year growth they have been outdone by the Chinese, Koreans and Norwegians," it said.

South Korean purchasing activity exploded over the first half, with assets ranging from shopping centres in Australia to office buildings in London and Chicago, being snapped up.

"We expect this trend of emerging-market institutional capital to continue to be a major theme within commercial investment markets for many years to come," it said.

Chinese capital grabbed the headlines in the last six months, with several high-profile deals being announced, especially in the office and residential sectors.

"Given the amount of capital in China being allocated to real estate investment domestically and internationally they are set to become one of the biggest players on the global stage," the consultancy said.

US investors were the biggest sellers in Asia-Pacific, particularly in Japan, where several large industrial and logistics portfolios have been sold recently.

On the buying side, Middle Eastern investors have accelerated their purchasing activity, deploying almost US$3.5 billion in the first half. However, it was investors from Asia-Pacific who deployed the most capital in the first six months - US$8.5 billion - with Chinese capital making up US$3.5 billion of the total.

Larger deals increased over the first half, with more than 20 per cent of transactions valued at more than US$200 million each.

"A major driver of this growth has been in the corporate sale and leaseback of offices, where activity more than tripled to more than US$2 billion in the first six months," said Jones Lang LaSalle. It maintained its full-year forecast for total transactions of US$450 to US$500 billion in the sector. But it added: "Rising costs of debt in the US may cause the market to pause slightly in the third quarter."