Singapore ranked fifth active city in real estate activity

Total direct real estate activity may have slacked off with a 4% rise in 4Q11, but there are still some sweet spots for investors.

According to Jones Lang LaSalle, while the 4% rise in total direct real estate activity for the traditionally strong fourth quarter of 2011 implies a fairly subdued market, in reality the regional and country level results show a global commercial property market that continues to provide opportunities for investors. This is illustrated more clearly by the 28% rise on full year 2011 volumes compared to 2010, with the fourth quarter being the most active of the year.

In contrast to most commentators’ expectations it was the Americas and Asia Pacific that saw quieter transactional activity in Q4 2011. The Americas flat lined; despite the USA rising 7%, declines in Brazil, Canada and Mexico kept volumes in line with Q3. All three smaller markets had strong Q1-Q3 investment volumes and it appears that investors took more of a wait and see approach in the final quarter which dragged down the regional performance.

For 2011 the Americas were up 59%, with all the markets recording gains. On the back of an improving economic picture in the world’s largest economy and commodity price increases boosting the attractiveness and resilience of the Brazilian and Canadian economies investors were encouraged to deploy their capital.

Asia Pacific finished a tumultuous year of natural disasters and tighter lending policies with a slight increase in the final quarter, to bring full year volumes slightly ahead of 2010. Given the significant headwinds at the start of the year in two of the region’s largest markets Japan and Australia and the mixed policy signals emanating from China then a worse result could have been expected.

Europe surpassed expectations with an 8% rise quarter on quarter and 20% rise year on year. It was the major markets of the UK, Germany and France that contributed 60% of all transactional volumes supported by double digit rises in Russia, Poland and Sweden. The UK benefitted as being the largest property market outside the Euro Zone, while Germany reaffirmed its status as the Euro Zones most successful economy.

In France the end of a beneficial tax agreement encouraged investors to complete deals in 2011. Only 8 of the 29 European countries in our coverage universe saw year on year declines in 2011. While sentiment is certainly shaky across the region it seems as though vendors have secured the pricing while they can, possibly with more negative expectations for 2012.

As we have already mentioned the major European markets have seen a rise in cross border activity, in fact in the UK, France and Germany cross border activity was stronger than domestic. On a quarterly basis and for the full year, London has emerged as the most active city globally, just beating a surge in activity in Paris in the final quarter. On a full year basis New York has reclaimed second spot from Tokyo. Asia Pacific now has five of the top ten most active cities globally.