Global commercial real estate investment dips two per cent yearly in 2019
International property consultant CBRE has reported that global commercial real estate investment volume in Q4 of 2019, including entity-level deals, was nearly level (-0.5per cent) with Q4 2018, while full-year volume fell by two per cent from 2018.
Regionally, Europe, the Middle East and Africa (EMEA) had substantial investment activity in Q4 of 2019, up by 19per cent year-over-year and compensating for subdued activity in the previous three quarters. Americas investment volume fell by 6per cent year-over-year in Q4, while APAC saw a 27per cent decrease .
Total Americas investment volume fell by six per cent year-over-year in Q4, while full-year volume fell by two per cent to $569 billion. However, excluding entity-level deals, the U.S. posted its best single-quarter volume in the past decade, increasing 11per cent year-over-year. Canada and Mexico investment also rebounded nicely in Q4. Softening in the region’s total volume stemmed from an 86per cent reduction in U.S. entity-level transactions.
The U.S. accounted for nearly half of global CRE investment volume in 2019. Despite constrained global market supply, low global bond yield expectations and falling hedging costs, investors should continue to favor U.S. CRE, as well as fuel a possible recovery of the mergers-and-acquisitions market.
EMEA investment volume grew by 19per cent year-over-year in Q4, while full-year volume fell by two per cent to $352 billion. Q4 investment activity fell year-over-year in Spain (-44per cent) and France (-3per cent) but grew in the U.K. (27per cent) and Germany (55per cent). The U.K.’s full-year volume fell by 19per cent, largely due to prolonged political uncertainty regarding Brexit, while France (12per cent) and Germany (8per cent) saw their full-year volumes rise moderately and reach new highs. Other European markets continued to attract capital in 2019 despite historically low prime yields, with Ireland (58per cent), Sweden (56per cent), Austria (39per cent) and Italy (37per cent) all seeing double-digit full-year growth.
Big-ticket transactions and renewed investor confidence inflated investment volumes throughout Continental Europe, with deal sizes larger than $100 million increasing nine per cent year-over-year.
Furthermore, office and residential assets remained the most attractive. Investment volumes throughout Europe remained high, with mergers-and-acquisitions deals remaining prevalent. Additionally, the European Central Bank’s decision to lower interest rates and restart quantitative easing gave an added stimulus to investment volumes this quarter. In 2020, as Western European markets continue to return low yields, capital likely will look toward a recovering U.K. market and Central and Eastern Europe for higher returns on CRE investments.
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