Global Capital Flows Q1 2012
- In Q1 2012 there was $77 billion1 in direct commercial real estate investment globally (Figure 1). The height of the European sovereign debt crisis three months ago, when Q1 investment decisions would have been made, has impacted transactional levels globally this quarter.
- The subdued start to the year has been further exacerbated by further upgrades to Q4 and full year 2011 volumes.
- Purchasing activity by US investors has increased by 25% year on year, with global funds surpassed by German and Japanese predominantly domestic purchasing activity in Q1.
- Cross border and inter-regional flows receded in Q1 with European buyers practically non-existent outside their own region. However, Europe continues to benefit from the greatest net inflows, while allocations to Asia Pacific were less than $400 million.
- Unlisted real estate funds were net sellers (-$2.5 billion), whereas REITs continue the trend established in 2011 of acquiring assets (+$5.8 billion).
- The logistics sector was the standout performer on the back of a number of portfolio deals, particularly in Japan. Hotel and retail had their lowest volumes since the start of 2010. Core office deals in the major cities of the world ensured the office sector remained the most liquid.
- The USA remains the most active market, while Japan and the UK saw large inflows from cross-border capital helping overall volumes. London reclaimed the top spot for most active city, toppling Paris.
- Despite the quieter start to 2012 we are keeping our full year 2012 forecasts steady at circa $400 billion. Investors remain focused on executing their strategies albeit with longer transaction times and additional due diligence. With prime property now re-priced we believe investors will look to the multitude of opportunities in secondary markets to underpin transactional activity.
Figure 1: Direct Commercial Real Estate Volumes, 2011-Q1 2012
| $ US billions | Q4 11 | Q1 12 | % change Q4 11 – Q1 12 |
Q1 11 | % change Q1 11 – Q1 12 |
| Americas | 37 | 29 | -22% | 31 | -6% |
| EMEA | 47 | 28 | -39% | 39 | -27% |
| Asia Pacific | 28 | 20 | -30% | 27 | -28% |
| Total | 112 | 77 | -31% | 97 | -21% |
% change expressed in USD terms which may differ from % change expressed in local currency
1. All currency figures in this report are in US dollars, unless otherwise noted. These are converted from local currencies using a quarterly average rate.