Both sentiment and levels of activity across the world’s major real estate markets have seesawed during the first half of the year. Following a slow start to 2012, the second quarter saw a modest rebound in investment and leasing turnover. But, economic uncertainty continues to affect investor sentiment. Deals are taking longer to close and the market remains polarised as investors steer clear of risky assets, focusing instead on prime product in core markets like London, Paris and New York. Yet, in spite of economic uncertainties, real estate as an asset class continues to attract a substantial weight of capital and remains firmly on track for this year’s global investment volumes to match the robust levels of 2011. In the corporate occupier markets, leasing volumes are also up on the subdued levels of the first quarter, but activity is still running 10%-15% lower than in 2011. Expansion demand is relatively weak as corporate occupiers look for further cost savings and smart growth ‘in situ’. Where there is new demand it is typically focused on higher-potential ‘emerging’ markets like Mexico City and Jakarta, which are showing healthy levels of corporate activity, or on speciality markets such as the tech-rich areas of San Francisco Bay and the energy and commodities-driven cities like Houston and Perth.
Source: Jones Lang LaSalle