(MENAFN- Khaleej Times) Middle Eastern investors have continued their inter-regional purchasing activity as global commercial real estate investment volumes declined eight per cent to $96 billion during the third quarter, according to preliminary numbers from Jones Lang LaSalle, or JLL.
"Middle Eastern investors are taking advantage of opportunities to acquire prime, core assets in the world's major cities as strong performance in major global property investment markets sustained despite the volume decline compared to same period in 2011," the real estate services firm said while forecasting that the full-year 2012 global business volumes would remain at $400 billion with a busy fourth quarter.
The majority of the investment from the Middle East has been focused on Europe and the US, with only a small amount of deal flow focused on Asia Pacific, JLL said.
"The most popular sectors have been offices, retail and hospitality although we have seen some interest in residential, student housing and other more niche real estate sectors. London and Florence have seen inward investment from the Middle East in the third quarter."
Fadi Moussalli, head of JLL International Capital Group in the Middle East, said Middle Eastern investors continued to benefit from surpluses generated by activity in hydrocarbons export.
"Driven by the limited opportunities to acquire quality assets in their home markets and their desire for geographic diversification, Middle Eastern investors remain active overseas. The past few years have seen the growth of private investors in addition to sovereign wealth funds, with Middle Eastern Investors also become more active traders, being willing to sell non-core assets with several major disposals recorded during 2012," said Moussalli. "Looking further forward we expect volumes to increase in 2013 and one trend to watch is the continued activity in alternative sectors, where our teams are currently extremely busy."
However, robust activity in the major markets has been offset by weakness in a number of smaller and emerging markets. The Americas saw $126 billion recorded in the first nine months in 2011 and 2012; the Asia-Pacific is at $68 billion in 2012, compared to $71 billion a year ago, while in Europe, Middle East and Africa, volumes are €75 billion compared to €85 billion in 2011, it said.
The JLL report, based on market research from 60 countries, observed strong sustained demand for stable major markets off-setting lower interest in more volatile emerging markets. Sectors such as residential and student accommodation have been attracting more global investor appetite as investors seek diversification and returns, it pointed out.
"Despite a slight fall on the $106 billion total recorded in the second quarter 2012, transaction levels have held up in the summer months of the third quarter. This is due to strong performance in established major markets in all three regions, such as the US, the UK, Germany and Australia," the report said.
David Green-Morgan, Global Capital Markets research director, said while investors are still being cautious and deals take longer to complete, there is a reasonably solid outlook for the rest of 2012.
"Financing for real estate transactions shows signs of improving in the US with CMBS issuance set to surpass the levels seen in 2011 and debt levels are steadily coming down, demonstrating that refinancing activity is taking place. Government quantitative easing and central bank policy activity has also improved global liquidity and confidence."
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