The search for recurring and predictable revenue certainly helped to renew investors’ interest in the real estate asset class. However, the exclusive focus on the core market segment (long lease / prime location) leads to a narrowing of the investment universe and consequently to further yield compression.
This being said, some investors are willing to accept a larger portion of rental risk in anticipation of an improving demand outlook. This is mostly the case with markets where the rental recovery is well underway (U.S.) or those having reached an inflection point (Ireland).
In this context, global investment volumes are up 20% compared to the first quarter of 2012 to $105 billion but still significantly down compared to the last quarter of 2012, particularly in the United States. In fact, the volatility of quarterly volumes is increasing and gives little insight into what should be expected for the full year 2013. JLL’s expectations of an increase in volumes of 15% to 20% seems to us at present to be somewhat optimistic
Source : Generali Real Estate