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

From Boston/SF

Russian real estate is the best investment

MOSCOW. (RIA Novosti economic commentator Mikhail Khmelev) - Investing in real estate is one of the most attractive and profitable ways of making money everywhere.

Now experts are pointing to the Russian property market as a good place for investors to put their capital. The commercial real estate market is considered to be the best option.

In 2006, deals involving office space in Russia made up almost one-quarter of all transactions in eastern and central Europe. In 2007, experts predict that the value of the Russian residential and commercial property business will leap to 11 billion euros. An investor's profits from real estate operations, depending on the type of investment, could vary from 8.5% to 35% per year.
In 2006, investment in commercial real estate worldwide totaled $643 billion (487 billion euros). According to Cushman & Wakefield, a real estate agency, they rose by one-third last year to a record high. The agency forecasts that world investment in real estate will grow in 2007 to $681 billion, with half of it in Europe.

European property has been described as the best investment opportunity compared with other continents. Its estimated returns exceed profits from international and European securities, as well as from U.S. real estate and securities. Experts predict that capital movement will change, too. Instead of direct investments in the purchase of real estate, investors will be putting their money into real estate investment funds.

Russia, and particularly the Moscow real estate market, has, according to major developers, become the world's third largest market after London and Paris. Forecasts by DTZ Holdings, a consultancy, indicate that the value of commercial property deals in Russia in 2007 will reach 5 billion euros, compared with 3 billion euros in 2006 and 1 billion euros in 2005.

Investments in this sector are divided practically half and half between retail and office space. According to Cushman & Wakefield, returns on office investments at the end of 2006 in Moscow were around 8.5% per year, while space rented out to retail stores yielded as much as 9.5%. By 2009, profits in this segment may come down to 7% or 7.5%, but even in that case they will be higher than in Western Europe, where commercial real estate investment returns are only 4% per year. read more

From Novosti