Global Commercial Real Estate: $900 Billion Invested During 2006

"CHICAGO – Jones Lang LaSalle’s latest global real estate capital report, released this month, records global real estate investment of US$682 billion in 2006, a surge of 38% over 2005, and nearly double 2003 volumes. Globalization of the asset class continued relentlessly as 42% of investment value now involves a cross-border transaction (up from 34% in 2005), and 29% were inter-regional (up from 23% in 2005).

Already a new annual record for the asset class, investors posted an additional $218 billion to the total transaction volume with residential and entity-level deals accounted, bringing the total aggregate global real estate investment volume to $900 billion–the strongest ever performance by global real estate markets.

Tony Horrell, CEO of Jones Lang LaSalle’s International Capital Group, commented: “There is currently a large overhang of investment targeting the sector with $4 of money chasing every $1 of product. Global real estate markets performed very strongly throughout 2006, and it was the first year that all major developed and emerging market returns were both aligned and positive. Investment was driven by increased allocations to the asset class, growth in investible for investment and by the increased attention of opportunistic private equity players who identified relative value in the sector. These increased flows into real estate gave rise to two notable phenomena in 2006 – an increasing number of ‘mega-deals’ and continued globalization of the asset class.”

The United States accounted for 40% of global transactions by value and the UK accounted for 15%. The German and Japanese markets have almost doubled their share of global volumes to 9% and 8% respectively, and the German market now attracts the same share of global cross-border investment as the U.K." read more

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