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Global Market Perspective

Optimism returns to the global real estate market - 1Q 2013

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Optimism returns to the global real estate market - 1Q 2013

The global real estate market steps into 2013 with a more confident stride. An exceptional rally in the final quarter of 2012 has served to demonstrate the strength of investors’ appetite for commercial property. The search for yield in a low interest rate environment, combined with a perceived reduction in macro-economic risks and a selective improvement in debt markets, is supporting increasing investor activity. In this context, we expect investment volumes to grow in 2013 by a further 10-15% on 2012 levels, with upside potential in the best secondary markets, which are now beginning to attract investor interest with their more attractive yields.

The leasing markets have been less resilient however, as corporates focus on productivity gains and cost savings, rather than on expansion. But even here, we detect an improvement in optimism, which should translate into renewed growth in leasing activity during 2013, with momentum gathering pace during the second half of the year. Prime rents are projected to increase modestly, by an average of 2-3% in 2013, but given shortages of high-quality space and low levels of new construction pipeline, even a modest uptick in absorption above our baseline projections could trigger rental spikes in some markets.

Source : Jones Lang Lasalle


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