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Global commercial real estate investment takes a dive

COVID-19, and all the associated economic and geographic headaches it brought to the world, has led to a major slump in commercial real estate investment volumes, which fell across all three global regions during the first half of 2020.

Commercial real estate investment fell 29 per cent globally, to $321 billion in the first six months of 2020 compared to the same 2019 period, according to JLL data.

The Americas region suffered the biggest fall, down 37 per cent compared to the first half of 2019. Asia Pacific volumes dropped 32 per cent and the EMEA region (Europe, the Middle East and Africa) saw a fall of 13 per cent.

“Cross-border investment has slowed significantly with travel restrictions, in particular inter-regional investment which declined by 61 per cent during the second quarter,” JLL Head of Research, Capital Markets, Sean Coghlan said.

“Those markets that are more reliant on foreign capital are feeling the effects, resulting in steeper activity declines.

“The localised nature of the pandemic has created a distinct divergence among markets, and expectations for a recovery in investment activity for the rest of 2020 will be varied,” Mr Coghlan explained.

“Activity in the US and Europe will continue to be subdued in the coming months,” he said. “But investor sentiment is beginning to shift toward deal sourcing, and transactional pipelines are beginning to rebuild.

“As transactional activity begins to recover, these dynamics will continue to lead the real estate out of the market correction.

“Early signs are beginning to emerge in parts of the US and France.”

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