Real Estate Globalization: Direct Investments to Hit $600 billion in 2006

Global direct real estate investment reached a record $290 billion in the first half of 2006, up 30% from 2005, according to Jones Lang LaSalle’s global real estate capital report, ‘Record Volumes, Record Globalisation’. It believes global commercial direct real estate investment will hit a record $600 billion in 2006.  

Tony Horrell, CEO of Jones Lang LaSalle’s International Capital Group commented: “Real estate markets are continuing their strong evolution into a global asset class, with cross border investment now representing 44% of total volumes, compared to 34% for the first half of last year."  

  • Offices account for 48% of total inter-regional purchases (down from 52% in first half 2005) with $33 billion invested in the sector.  
  • Hotel investments have increased significantly to $16 billion (23% of inter-regional purchases, up from 20% in 2005) 

Global Real Estate Highlights:

Americas:
  • Direct commercial real estate investment in the Americas was $129 billion in the first half of 2006, up 27% on first half 2005.  
  • Cross-border investment represented 27% of total investment (up from 16% on H1 2005).
  • The USA represents 96% of the region’s transactions by value; other investment markets include Canada and the rapidly growing cross-border markets of Mexico and Brazil. 
  • US and Canadian real estate ownership is becoming increasingly global, with cross-border investment totalling $35 billion in the first half of 2006.  

Europe:  

  • Direct commercial real estate investment in Europe was $117 billion in the first half of 2006, up 30% on the same period in 2005.  
  • Cross-border investment represented 68% of total investment (up from 57% in H1 2005). 

Asia: 

  • Direct commercial real estate investment in Asia Pacific was $43 billion in the first half of 2006, up 40% on the same period in 2005.  
  • Cross-border investment represented 29% of total investment (up from 28% in H1 2005). 
  • Japan now accounts for 51% of total Asia Pacific transaction activity, with a further 40% taking place in four major markets: Australia (12%), China (11%), Hong Kong (10%) and Singapore (7%).  

In another note, CBRE estimates that the US Commercial Real Estate Serervices is a $24 billion industry with the top 5 accounting for only 16.9% of the market. CBRE is the top player, followed by C&W, TCC, JLL, GBEL.

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