Global real estate transaction volumes fell in the first quarter of this year in line with weaker market sentiment, according to the latest capital market research.
However pockets of growth were registered in some regions with expectations for 2016 activity to stay broadly in line with 2015, says the report from Jones Lang LaSalle (JLL).
Based on JLL’s preliminary data on global capital flows, real estate investment volumes in the first quarter of 2016 dropped 17 per cent year on year to US$128 billion. This compares with US$154 billion registered in the first three months of last year, which was the strongest start to a year in this current six year cycle.
‘The heightened level of volatility and risk aversion that we experienced in the first four to five weeks of 2016 have combined with what is always the quietest quarter of the year to make the results for quarter one of 2016 look quite weak,’ said JLL’s global capital markets research director, David Green-Morgan.
‘Nonetheless, recovery has been particularly quick, equity markets are back to early January levels and credit spreads have narrowed again. Capital remains unspent and more is likely to be deployed as we move through the year, leading us to believe that 2016 activity will be broadly in line with 2015 at around US$700 billion,’ he added.
A regional breakdown shows volumes in the Americas are 16per cent lower than a year ago at US$61 billion. The US mirrored the wider regional decline with a 16per cent fall but the Canadian market bucked the trend slightly with a more moderate 3per cent decline. The Latin American markets suffered most with falls of 81per cent in Brazil and 57per cent in Mexico.
European volumes are 20 percent lower in US dollar terms at US$46 billion with France and the UK recording the biggest falls of the major markets with 30per cent and 37per cent declines respectively. Germany performed slightly better with a 7per cent drop while, elsewhere, there were gains in the Nordics, Benelux, and CEE.
Asia Pacific volumes were 16per cent lower at US$21 billion with activity reasonably divergent across the region. Australia and Hong Kong came in higher than a year ago while South Korean activity also bounced back from the first quarter of 2015. Both China and Japan registered a decline and most emerging markets were all lower than the first quarter of 2015.