Global Investment Spikes

Global commercial real estate investment volume (single-asset, portfolio and entity-level transactions) totaled US$275 billion in Q4—the highest level of any quarter in 2017.

A flurry of deals in Asian markets resulted in a record quarter for the APAC region, with transaction volume up by 21.3% year-over-year (Q4 2017 vs. Q4 2016). China’s controls on capital outflow seemed to encourage domestic capital deployment in 2017, leading to annual investment volume growth of 29.7% for the country. These regulations have had a knock-on effect elsewhere, as Hong Kong saw the close of APAC’s two largest deals for 2017 in Q4 totaling US$8 billion. The Pacific markets—particularly exposed to a slowdown of Chinese investment and a tighter bank lending environment—were weaker year-over-year in Q4, down by 3.9% against Asia’s 27.4% year-over-year increase.

EMEA saw a similar Q4 jump, although the region’s strength in activity, as reported in U.S. currency, was masked by U.S. dollar weakness. Q4 polished off a record year for the EMEA region, with annual volume totaling US$336 billion, up by 9.5% from 2016. This was driven by several large portfolio and platform deals, with continental Europe generally outpacing the U.K. in the aftermath of Brexit. With Q4 year-over-year growth of 16.2%, the U.K. has recovered from the extremely low, post-referendum levels recorded in Q4 2016, but still trailed the investment activity it saw in Q4 2015. The performance was reversed in continental Europe, with countries such as Germany and Poland falling short of Q4 2016 levels, but overall experiencing investment at record levels in the wake of Brexit.

The Americas experienced a more subdued quarter, falling by 12.6% from Q4 2016’s level, but still had the lion’s share of total global investment in 2017 (US$482 billion vs. $336 billion for EMEA and $141 billion for APAC). While the U.S. experienced a 13.7% year-over-year decline in transaction volume in Q4, the annual decline in 2017 was only 6.3% from 2016 due to a stronger performance in Q3 2017.

By Richard Barkham, Global Chief Economist, CBRE.

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