The world’s most liquid real estate market now exists in Paris.
The fourth quarter of 2019 saw an increase in global commercial real estate investment volumes of 10% to $245 billion, according to a report released this week by global property consultant JLL. This brought full-year activity to $800 billion, up 4% from the elevated levels seen in 2018, making 2019 the strongest year for commercial real estate investment on record.
Growth is driven by established markets in all three regions
Regional activity in the Americas increased by 15% in the fourth quarter, reaching $97 billion. Due to this and the strong third quarter, full-year volumes increased by 12% to $347 billion. The U.S. is the major contributor to regional performance, where full-year volumes were supported by persistent investor demand for industrial assets and ongoing resilience in the office sector. Annual sales activity in Canada are up 9% as a result of
primarily because of the concentration of activity in major office markets like Toronto, Montreal, and Vancouver. Mexico and Brazil both experienced double-digit growth in Latin America in 2019 as a result of significant industrial transactions in both markets.
EMEA experienced a turnaround in the fourth quarter as sales volumes increased 11% to $93 billion from Q4 2018. Volumes for the entire year reached $284 billion as a result, 5% less than in 2018. 2019 saw record investment in Germany, which now leads the region in terms of market liquidity after volumes increased by 1%. Similarly, transaction activity in France increased by 15%, with 2019 setting a new high-water mark for the
market. Numerous other important markets in the area also did well in 2019, with increased activity seen in Spain, Sweden, Italy, Norway, Ireland, and Switzerland, among other countries. On the other hand, Brexit-related uncertainty continued to constrain activity in the UK, but it is anticipated that market conditions will improve in 2020 as results become more certain.
Despite an Asia Pacific fourth quarter that was comparatively slow, the year’s full-year volumes were up 6%, to $169 billion, thanks to the outstanding start to the year. Core markets like China, Japan, Singapore, and South Korea, where domestic and foreign investors are equally active, supported the increase in trading.
Political unrest continues to have a negative impact on Hong Kong, where full-year investment decreased by 53%.
Good industrial performance attracts foreign investment to the United States.
2019 saw a 24% increase in global industrial investment, reaching $166 billion. Investors are increasingly searching outside of their home markets for products as bidder pools become stronger and product competition increases, with cross-border acquisitions in the sector reaching a record high of $53.6 billion.
The United States continued to be the largest recipient of foreign investment in the industrial sector, receiving 47% of all international capital flows into the sector in 2019. Due to the relative availability of scale, international investors such as global funds, as well as organizations from Canada and the Middle East, have flocked to the U.S. market. Investors have also been drawn to the strong fundamentals as robust absorption has largely offset an
the strongest rent growth the industry has seen in the last three years, due to an increase in new deliveries.
Increased activity in the office sector fuels Paris’ growth
For the first time ever, over the course of a full year, Paris has become the world’s most liquid real estate market. $30 billion was invested in total in 2019, an increase of 7% over 2018. Investment in Paris was heavily focused in the office sector, continuing a trend seen throughout the year. Office sales increased by 6% to $24.8 billion, which was a record high since 2007 and accounted for 83% of all investments made in the Paris market. Eight acquisitions totaling more than $500 million contributed significantly to this growth through large-scale transactions.