The current state of commercial real estate markets, according to Jones Lang LaSalle's new Global Market Perspective survey, indicates a temporary slowdown in the ongoing global real estate market recovery. With a more positive outlook for the global economy, sentiment is improving, and full-year 2012 commercial real estate volumes are forecast to exceed 2011's high levels. real estate companies in qatar
In Q1 2012, total global investment and leasing volumes dropped by about 20% compared to Q1 2011. This decline can be due to a slow reaction to increased investor and corporate occupier caution in late 2011. Volumes have also been stifled by a lack of available investment product, a scarcity of high-quality lease space, and a lack of large transactions.
Jones Lang LaSalle's Arthur de Haast, Head of the International Capital Group, tells World Property Channel, "Despite the apparent uncertainty in reported investment volumes, there is still a healthy deal pipeline. The amount of capital devoted to real estate is high, with more inflows from other asset classes anticipated. Real estate investors' trust is returning, and although some are still cautious, others are continuing to execute their plans, although with longer transaction times. On this basis, we expect global real estate investment volumes to stay around US$400 billion for the full year, as they were in 2011. The most significant increase is anticipated in the Americas, where volumes could be 10-15% higher than in 2011."
A skewed picture of leasing
Global office leasing volumes fell by about a fifth in Q1 2012 compared to Q1 2011. Corporate occupiers are continuing to improve their balance sheets and cut operating costs while remaining cautious in their transactional operations. Strong corporate occupier demand in emerging markets such as Beijing and Sao Paulo is offsetting soft leasing volumes in major financial centers such as New York and London. Overall, this indicates that global office leasing volumes would be significantly lower in 2012 than in 2011.
Since the beginning of 2010, office rental growth has been the slowest.
The Jones Lang LaSalle Global Office Index, which monitors rental output of prime office space in 90 major markets against a backdrop of lower leasing volumes, eased to 0.5 percent growth in Q1 2012, compared to 0.8 percent in Q4 2011. In Q1 2012, rental growth dropped in nearly a third of the markets tracked, the lowest increase since Q1 2010.
The Americas saw the most rental rise, at 1.6 percent quarter on quarter. In Asia Pacific, the figure is 0.2 percent. Rents in Europe fell for the first time since Q4 2009, with a -0.3 percent drop from quarter to quarter. The BRICS economies, South East Asia, and cities with strong links to the technology, oil, and commodities sectors saw the most development. Beijing and Jakarta saw a 49 percent increase in rental prices year over year, while Sao Paulo saw a 30 percent increase and Moscow saw a 20 percent increase.
Jeremy Kelly, Director of Global Research at Jones Lang LaSalle and author of the Global Market Perspective report, said of the slowing overall rental growth, "Despite a slowdown in rental growth in the last quarter, most major prime office markets are expected to see rental increases in 2012, with some markets like Beijing, Sao Paulo, Toronto, and San Francisco possibly seeing double-digit increases. Prime rents are up 5% year over year in Q1 2012, and up 11% as compared to the market's bottom at the end of 2009. The global office vacancy rate has dropped to 13.4%, the lowest level in over two years. Supply would remain constrained due to a scarcity of high-quality space in the pipeline."
Demand for warehousing is supported by a resilient retail market.
In Asia Pacific, strong customer demand continues to boost retail and warehouse industries. Despite ongoing demand pressures in Europe, the country's prime retail and warehouse markets have remained resilient. Improved business and consumer confidence in the United States is assisting in a steady recovery in warehouse leasing demand, which will boost rental growth in 2012.
As they diversify into rapidly rising secondary and tertiary cities, international retailers are raising leasing demand in Greater China. This pattern is expected to continue over the next decade, as China's top cities provide commercial real estate opportunities fueled by market growth and economic transformation.
Jeremy Kelly added, "In terms of the overall outlook for 2012, "Investors are wary, and understandably so, after the second half of 2011 was marked by economic uncertainty. Capital prices and prime yields are holding steady, indicating that there is still a lot of interest in high-quality core well-let properties. The outlook for global property remains on track for a measured recovery over the rest of 2012, assuming no more economic shocks."