2019 broke record for global commercial transaction volume with US$800 billion

Shanghai, Feb 27, 2020 – 2019 stands as the most active year for global real estate investment on record as measured by transaction volume. Investment in global commercial real estate increased by 10 per cent in Q4 2019, rising to US$245 billion, bringing full-year activity to US$800 billion, up 4 per cent, according to the latest Global Capital Flows from JLL.

Cross-border world

Global cross-border transaction volumes spiked in Q4 2019, reaching US$107 billion, representing the second-highest level on record behind Q4 2017. In total, 2019 full-year cross-border activity reached US$349 billion. Inter-regional flows increased significantly in 2019, with US$254 billion moving from one region to another, well above the long-run average of US$177 billion.

Industrial draw

The industrial sector registered its most active ever year on record. Global investment rose by 24 per cent to US$166 billion, and the industrial appeal is motivating investors to look outside of their home markets for assets as cross-border investment in the sector grew to a new high of US$53.6 billion.

REIT performance

Globally, REITs have outperformed other global asset classes over the past decade. Since 2010, global REITs have produced an annualized total return of 11 per cent, compared to single-digit annualized returns for global equities and fixed income over the same timeframe — expected listings in Singapore and India in 2020 to diversify the REIT base regionally.

Asia Pacific moderates and matures

In Q4, Asia Pacific’s record-breaking streak ultimately ended as a fourth-quarter slowdown while investment flows moderated 4 per cent relative to the same period in 2018. On the flip side, the robust start to the year means delivered an increase to full-year volumes of 6 per cent, to US$169 billion. The rise in activity centered on core markets, such as China, Japan, Singapore, and South Korea, where domestic and foreign investors alike remain active.

Global investment moderation to continue

Expect global investment in commercial real estate to moderate slightly, by 0-5 per cent, to roughly US$780 billion. Continued global political and macroeconomic uncertainty will influence investment volumes in 2020. While there are some hints that global growth may pick up slightly, pockets of concern remain from rising geopolitical tensions, and the emergence of the coronavirus will undoubtedly influence the rapid growth of corporate credit. While investors remain keen to access the sector, continued caution and selectivity. 

“The fundamentals of Asia Pacific’s commercial real estate market will again serve as a major draw for investors in 2020. Despite macroeconomic challenges and the highly unpredictable nature of the coronavirus outbreak, longer-term investor sentiment remains extremely positive. We foresee investor strategies becoming more selective and further diversification into the logistics, living and datacentre sectors. The continued low interest rate environment and supportive central bank policy will also offset some of the macro headwinds and provide further confidence to investors’ cross-border strategies,” says Stuart Crow, CEO, Capital Markets, Asia Pacific, JLL.

“With the impact of coronavirus, investments in China are likely to slow down but investors have indicated that there is still optimism about the fundamentals and prospects of China. After the outbreak, We still see a major deal signed recently. As such, we believe that there is still large capital in the market and domestic and foreign investors are still actively pursuing investment opportunities in the China market," points Jim Yip, Head of Capital Markets for JLL China and East China.

For more information, download JLL’s Global Capital Flows 2019 report here.