Commercial property sales increased by 30% on a global basis last year to hit a record $733 billion, according to an upcoming report by brokerage firm Cushman & Wakefield.
Few regions of the developed world saw a decline in sales activity. But the real push came from Europe and Asia, which were up 50% and 48% over 2005 levels respectively. With investment volumes of $345 billion (the U.S. accounted for 47% of global activity, down from 54% in 2005), Europe increased its share from 35% to 40%, and Asia increased from 11% to 13%.
Cross-border capital continued to be the dominant force during 2006 when it represented 29% of the total global market, up from 25% in 2005. Europe continues to have the strongest penetration of cross-border investors, who now account for half of all investment in the region. Asia has seen activity from foreign buyers rise to 32% from 28% while U.S. and Canada saw a more moderate increase of 13%.
“The development of the global REIT market is likely to drive an increase in merger and acquisition activity during the year, which may divert capital from direct property acquisitions hence reducing global property flows,” says David Hutchings, head of Cushman & Wakefield Research Europe Middle East and Africa. “[But] this is symptomatic of the increased weight of capital targeting real estate and opens the door to more trading activity in 2007 and 2008.”
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