Global CRE Investment Hit All-Time High Of $800B In 2019
Investors spent a record $800B in commercial real estate deals globally in 2019, an increase of 4% compared to 2018, according to a new report by JLL.
The itch to get a piece of the action in commercial real estate is stronger than ever.
The last time global CRE investment volume was nearly as high was in pre-recession, pre-credit freeze 2007, when it was just shy of $800B, according to JLL. By 2009, investment volume had plunged to just over $200B for that year, and has been steadily rising since then, except for a dip in 2016.
Investors also knew where they wanted to be. The United States continues to be an investor magnet when it comes to commercial deals, with New York City topping the darling list. Core markets in Asia also outperformed, including those in Japan, China, South Korea and Singapore, the report said.
Among the top 30 cities for CRE investment in 2019, six were in Europe, eight were in Asia-Pacific and 16 were in North America, the report said.
A few markets took serious hits in 2019, namely London and Hong Kong. Brexit-inspired uncertainty hung over the London real estate market as thickly as fog used to, and so investors stayed away, with deal volume in the British capital at about $23B in 2019, down 41% compared with the year before.
Investor interest in London CRE will perk up again once Brexit is finally a done deal, JLL posited.
As for Hong Kong, total CRE investment was a little less than $20B in 2018. In 2019, a year of protest in the former British territory, CRE investment was less than $10B.
London was the top city for CRE investment volume in 2017 and 2018, JLL reported, but Brexit pushed it down to No. 4 in 2019, with Paris as the new No. 1, followed by New York and Los Angeles.
Besides those two, other U.S. cities and areas in the top ranking for CRE investment last year included (in descending order) Seattle, Washington, D.C., Boston, Silicon Valley, Chicago and Dallas.
Other than Paris and London, the top European cities for parking real estate capital included Berlin, Munich, Madrid and Frankfurt. Top Asia-Pacific cities were Seoul, Tokyo, Shanghai and Singapore.
As a region, Asia-Pacific was quite attractive to CRE investors in 2019, as it has been for a number of years, with investment totals there rising consistently since 2015. Last year, total investment in the Asia-Pacific region also reached a record level, coming in at $169B.
Secondary cities in various parts of the world will be more attractive investment destinations in the future, the report predicted.
"Beyond the gateway cities, high-growth, secondary cities in both mature and transparent markets will continue to present opportunities for investors," the report said. "Mid-sized cities with innovation credentials, a highly qualified workforce and cost efficiencies are seeing economic growth and increased concentrations of human capital."
