Slow start to transactions of commercial properties worldwide: survey

The firm’s survey showed that all major commercial property markets globally witnessed a quieter start to the year after a very active 2011, particularly in the final quarter.
Substantial one-off transactions in established markets, such as the sale of the Trafford Centre shopping complex in England for the equivalent of Bt80 billion that enhanced volumes in the first quarter of last year were not repeated in the first quarter of this year.
The decline was also due to sustained economic pressures restricting the availability of debt finance, especially for new borrowing.
Arthur de Haast, head of the international capital group at Jones Lang LaSalle, said yesterday that while volumes are down and the economic backdrop remains uncertain, the underlying attractiveness of real estate continued thanks to strong demand and sound fundamentals.
The final quarter of 2011 was one of heightened uncertainty in Europe, but reassuringly policymakers realised the seriousness of the situation and took the appropriate action, which helped to stimulate activity across the continent, he said.
Volumes and sentiment in the US continue to improve with growth of 16 per cent on a year-on-year basis in the first quarter, on the back of improving economic indicators, while Canadian and Mexican volumes increased more than 50 per cent.
De Haast said 2011 “was the second strongest year on record for Asia-Pacific with annual volumes at US$98 billion. Despite a slowdown in Q1 2012 compared to Q1 2011, we expect performance to improve during the coming months as monetary and fiscal policy is gradually loosened around the region”.
The desire to close deals in the final quarter of 2011 was evident with a further upgrading of the full-year numbers. Such was the extent of activity in 2011 as a whole that it will take time for that momentum to build again in 2012.
While investors remain somewhat cautious, most are continuing to execute their strategies albeit with longer transaction times and more detailed underwriting.
Given the weight of capital available, Jones Lang LaSalle expects full-year 2012 transactional volumes to be consistent with 2011 at circa $400 billion (Bt12.3 trillion), with a number of portfolio deals globally expected to boost activity.
De Haast said 2012 “is likely to be another year dominated by policy responses to changing economic conditions, for activity to materially surpass 2011. The company would need to see more debt available globally and for a sustained increase in activity in secondary markets, which it hasn’t seen as yet in 2012.”