The global value of Commercial Real Estate (CRE) investment transactions increased by 4.5% on Q2 2016 to USD 220 billion in Q2 2017 (see Figure 1: Commercial Real Estate Investment).1This increase is due to a strong performance in EMEA and APAC where investment volume was up 26.1% and 16.8%, respectively. In the Americas, investment volumes dropped 9.9% on Q2 2016, however, this still represents a healthy investment level as it is well above its 10-year second-quarter average.
Investment activity in EMEA was up 26.1% in Q2 2017 on Q2 2016 mainly due to the upturn in trading activity in the U.K. (up 14.5% in H1 2017 versus H1 2016).2 Strong continued interest in the German market fueled investment activity there, while in France investment activity was somewhat muted in the first half of 2017. Elsewhere, in markets such as Spain, Italy and the Netherlands, strong confidence is supporting investment activity.
Investment in the APAC region continued to show growth of around 16.8% in Q2 2017 on the same period a year earlier. The uptick is mainly driven by an increase in the activity of domestic buyers in China and Hong Kong. Controls on capital outflow have encouraged domestic capital deployment in China. However, Pacific markets declined in Q2 2017, a trend that continued from the first quarter of 2017.
In the Americas, investment activity was subdued due to a drop in activity in the U.S. of 7.7% in Q2 2017.3 When we exclude entity level transactions from the total, the Q2 decline increases to approximately 10%. The unevenly distributed decline in the U.S. is interesting with only the Southeast and Southwest showing an increase in investment activity. It should be noted that the Q2 2017 estimate is likely to be revised up as further information on non-U.S. markets becomes available.
1. All comments (and quoted changes) relate to the trends as measured in fixed U.S. dollar exchange rates unless otherwise stated.
2. If we exclude the Logicor deal, investment activity in EMEA is up 7% in Q2 2017 on Q2 2016.
3. It should be noted that “Entity Level” transactions are included in these figures, whereas they are excluded from the Americas figures reported with CBRE’s earnings release.
4. For the calculation of fixed exchange rate totals all local currency values are converted to USD using the average daily FX spot rate in Q2 2017.