Global real estate deal volumes fall 13% to $187bn in first quarter

Global real estate transaction volumes in the first quarter of 2021 declined 13 per cent to $187 billion amid the coronavirus pandemic-related movement restrictions, according to the latest report from consultancy JLL.

Mature markets such as the US, the UK, France and Japan recorded stronger performance during the quarter.

“While the overall global investment market remained resilient, its recovery is proving to be uneven across geographies and sectors,” Sean Coghlan, global director of capital markets research and strategy at JLL, said.

“We continue to see improving economic conditions, continued government stimulus and increasing inoculation rates as providing reasons for optimism and avenues for market improvement, but we do remain cautious given ongoing restrictions in Western Europe and large scale flare-ups in India.”

The coronavirus pandemic, which disrupted air travel, shuttered borders and led to an overnight shift in work patterns, have also impacted the real estate sector. Investments in industrial real estate have risen over the last year as homebound users flocked to e-commerce sites to shop, leading to a demand for warehouse spaces.

Logistics and multi-family investments represented 63 per cent of total transactions in the first quarter, up from 44 per cent during the same period past year, according to the report.

Europe posted the strongest first-quarter performance on record with a total investment of €10bn ($12.18bn) in the industrial and logistics sector, which is more than 40 per cent higher than the first-quarter five-year average from 2016 to 2020.

Investment into the multi-family residential segment during the quarter also increased 66 per cent in Europe , led by the UK, Germany and France, the report said. In the Asia Pacific, Japan was the most liquid market with investments totalling $11.5bn, partially due to the persistent appetite for multi-family assets in Tokyo, Osaka and Nagoya, according to the report.

Markets historically focused on office and retail investments also experienced gains in investor confidence in the first quarter.

“During 2021, investors demonstrated increased confidence for select markets in Asia, such as Singapore and Hong Kong, where cultural norms and the structure of housing in the markets limit widespread work-from-home policies,” the report said.

Overall, momentum in global office markets remained subdued, with first-quarter leasing volumes down 31 per cent on an annual basis. All three regions including the US, Europe and Asia-Pacific recorded lower transaction levels.

Cross-border capital flows remained fairly muted throughout the quarter, offset by markets with deep domestic access to capital. Global investors with ample dry powder and an established on-the-ground presence continue to play a critical role in the cross-border market, deploying $17.5bn in the first quarter, according to the report.

The UK is benefitting from renewed interest from North American and Singaporean firms, which invested $2.9bn in the first quarter, according to JLL.