The global financial crisis had a profound impact on all property markets with transactional activity globally falling by 72%.  Conversely, in emerging markets transactional activity declined by 33%.  This below average decline has had a significant effect on the share emerging markets now account for globally.  Between 2007 and 2011 their share has almost tripled from 5% to 14%.

As well as being an important destination for cross border capital flows emerging nations are increasingly important sources of new capital for vendors in developed markets.  Investors in emerging markets are currently seizing the opportunity to acquire prime, core commercial real estate in Europe and the US.  The Middle East tops the list with investors from Israel and the United Arab Emirates being the most prolific purchasers of overseas capital from emerging markets.  Another trait of emerging nations is the large role that governmental controls and changing regulations play in the movement of capital.  One of the trends we have seen in recent times is for Asian pension funds to be much more active in cross border purchasing activity.

Further analysis on emerging markets and their role in the global real estate investment landscape can be found in the June 2012 edition of IP Real Estate.

David Green-Morgan is Global Capital Markets Research Director at Jones Lang LaSalle responsible for tracking the movement of real estate capital globally.