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Global real estate investment sees record $1.75tn – for now

Commercial_real_estate_riseGlobal commercial real estate transactions enjoyed reached record levels in 2018, totalling $1.75 trillion (€1.55 trillion) – but not for long, according to real estate services firm Cushman & Wakefield.

The figure represents a 4% rise on 2017 ($1.68 trillion), which was also a record year.

Asia-Pacific led the pack in 2018, accounting for $866 billion of the investment volumes. They are estimated to increase by 1% this year to $875 billion.

In contrast, investment volumes in Europe, the Middle East and Africa (EMEA) suffered a 10.8% drop, reaching just $331 billion. Cushman & Wakefield attributes this to “a pull-back from both global and domestic sources and the conclusion of some large portfolio deals.” However, EMEA volumes are predicted to rise by 2.5% on last year’s volumes in 2019.

Expected transaction volumes around the world in 2019 are projected to surpass last year and reach around $1.75 trillion “as investors target a wider range of markets to find opportunity, and more sellers come forward as real estate strategies adjust to evolving monetary policy, geopolitical tensions and structural change,” the firm said in a statement.

David Hutchings, Cushman & Wakefield’s head of investment strategy for capital markets in EMEA, said: “The economic environment is weaker than expected just a few months ago but so too is the inflation outlook on a global basis. As a result, while risk is up, the day of reckoning on interest rates for corporates and investors has again been delayed. The coming year is therefore set to see a further extension of the property cycle, offering investors another chance to get their portfolio into shape ahead of a period of slower growth.

“With a stable, contracted income and exposure to growth and inflation, real estate continues to be incredibly attractive and demand remains strong for the right product. However, defining the right product has become ever harder as powerful, market-moving occupier strategies are reshaped by e-commerce, social and business change, low growth and affordability constraints,” he added.

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