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Credit crisis to cut
global investment 30%
source: Bkk Post Apr 11 2008
Global direct real-estate investment is expected to drop by at least 30% from
the record level of US$759 billion last year due to the decline in American and
European markets, according to the international real-estate consulting firm
Jones Lang LaSalle. The company's latest Global Real Estate Capital report
indicated that real-estate investments in Asia might be more resilient but that
volumes would not achieve the heights of 2007.
Tony Horrell, international director and head of European Capital Markets, said
that reduced credit availability and investor confidence were likely to stay in
the first half of 2008. He said that the debt squeeze would continue to ripple
through markets as central bankers and financiers work to stabilise and
stimulate the debt markets.
The situation is being exacerbated by unease about the global economy, in
particular about major economies such as the US, the United Kingdom and Japan.
''However, we do not expect a strategic and planned withdrawal of capital from
real estate in 2008, or investors to significantly adjust their allocations to
the asset class,'' he said.
Of total value in 2007, domestic investment remained at around $400 billion
globally, similar to 2006's volume, cross-border investment increased by $58
billion to $357 billion in 2007 and of that, inter-regional investment accounted
for $242 billion. In percentage terms, cross-border transactions now account for
47% of total transactions and inter-regional for 32% of total transactions.
The Asia Pacific saw remarkable growth in 2007, with direct commercial
real-estate investment reaching a record $121 billion in 2007, up 27% on 2006.
Japan, by far the largest market in the region, accounted for 50% of total
transactions. Another 36% of transaction activity took place in four markets:
Australia (15%), Hong Kong (7%), China (7%) and Singapore (7%).
Cross-border volumes in the Asia Pacific increased to $57 billion last year,
accounting for 47% of total transactions. All major markets in the region
registered increases, with the exception of the Philippines and Thailand where
cross-border volumes were constrained by rigid foreign ownership legislation and
a lack of investment-grade assets offered for sale.
"Overall, the real-estate picture for Asia looks
positive and global capital allocations continue to re-weigh in Asia's favour".
"We are likely to expect a rebound in investor confidence and transaction
volumes to increase in the second half of 2008,'' says Stuart Crow, JLL's head
of Asia Capital Markets.
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