Jones Lang LaSalle anticipates 30% to 40% rise in direct commercial real estate investment

KUALA LUMPUR: Jones Lang LaSalle is anticipating a 30% to 40% rise in direct commercial real estate investment volumes globally in 2010. The global real estate services firm in its Global Market Perspective February 2010 report said the Americas, because they are coming from a low base, may be poised to see the fastest rate of growth at a projected 50% to 60%. Expected volume growth in Asia-Pacific is 30% to 50% and Europe at 20% to 30%.

The report said Asia-Pacific experienced the smallest decline in total transaction volumes in 2009, dropping 23% to US$66 billion (RM219.3 billion). It also experienced an impressive capital markets bounce back as a robust economic recovery prompted values to bottom-out and begin to rebound earlier than in other regions.

The 2009 volumes of the Americas plunged 64% to just US$45 billion. In Europe, meanwhile, total transaction volumes finished the year at US$98 billion, representing a 41% decline from 2008.

Jones Lang LaSalle, however, said there was a sharp recovery in the second half of the year led by the UK, with significant improvements also seen in France, Germany and the Netherlands. “In 2010, we anticipate seeing a 30% to 40% increase in direct commercial real estate investment volumes globally.”

Asia-Pacific is leading the global recovery in the occupational markets but Jones Lang LaSalle said it remains “guardedly optimistic” about the region’s occupational market.

“The year of 2010 is expected to be a year of two halves… it is a cautious first half with activity potentially taking off in the second half. Net absorption, however, is expected to remain below pre-recession levels,” it added.

It said markets have started to bottom out over the past two to three months. An increase in net absorption across the region was seen in the fourth quarter last year, although some of this demand is a legacy of earlier pre-commitments on new buildings. On the quarterly basis, the increase is almost 20%.

“We are seeing particularly strong occupier expansion in China, with local companies taking advantage of opportunities to move into higher grade space.

“Elsewhere in the region, Hong Kong and Singapore have recorded an increase in demand from the financial sector. Tenants’ market is stimulating in Seoul, whilst in India major outsourcing requirements are being dusted off,” the report said.

Rents are starting to trough in most Asian markets, it added, saying that the leasing market in Shanghai and Hong Kong has turned favourable and landlords are increasing their asking rents.