Global Property Investment Stands at a Record $382 billion

(PRLEAP.COM) Jones Lang LaSalle reports interim first half data shows a record $382 billion in deals for the world’s red-hot real estate investment market. In spite of higher borrowing costs in major regions, property bought or sold for investment purposes was up by 16.6% in the same period last year as debt-funded investors’ switched tactics and cash rich investors came to the forefront, JLL said.

‘The increased cost of debt in Europe and North America has led to negative yield spreads in many markets, forcing highly leveraged investors to adopt increasingly opportunistic strategies including development and repositioning of assets,’ Padraig Brown, JLL’s head of global strategy and research, said. ‘Equity investors, with less reliance on debt, now occupy a strong position in competitive bidding against highly leveraged investors,’ he said.

Record volumes were seen in each of the main regions and were expected to remain strong over the remainder of 2007, even as investors became more selective, JLL said in a note.
‘Globally we continue to see a weight of money targeting the sector, evidenced by the record real estate funds raised by Private Equity in recent months,’ Tony Horrell, chief executive of JLL’s European Capital Markets Group, said.

The total investment in America increased by 32% to $170.7 billion, driven largely by private equity takeovers and real estate investment trusts with the subsequent break-up of their portfolios, JLL’s data showed. Brown said he expected U.S. volumes, in the second half to return to ‘more historical levels’ now that some of the larger REIT portfolios had been disbanded and resold.

European investment volumes rose by 4% to $156.6 billion, aided by the strong gains in Germany and France, together with the UK, accounted for two-thirds of all business. Europe experienced a ‘flight in quality’ due to secondary property yields had come down too far, not least in the UK, JLL said.

Asia Pacific region property investment rose by to $55 billion, this was mainly due an increase in cross-border investment. ‘As strong Asian economic growth continues and interest rates in the region remain low, Asia is increasingly becoming the destination of choice for opportunistic international capital and we expect this trend to continue for the remainder of 2007,’ JLL’s note said.

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