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Bullish outlook for international property investment

Property investment at global levels continues from strength to strength this year despite economic uncertainty over the Greek bailout and the Chinese stock exchange crisis. Transaction volumes rose by 9 per cent in the second quarter of this year with the US occupying the position as favourite investment destination. Demand was particularly high among investors for rental apartments in the US.


The latest Global Market Perspective published by Jones LaSalle (JLL) for Q3 this year finds the mood bullish in world property investment markets – “investor appetite for real estate shows no signs of abating,” opens the report. Activity is particularly intense in the commercial sector where office leases sit at their highest levels for the last three years.


Bigger deals

According to JLL, investment levels are increasing both in type and complexity. Between April and June this year, the volume of transactions in global property investment reached a total of US$177 billion, 9 per cent higher than the same period in 2014. Larger deals and portfolio transactions are now commonplace.


When exchange rates are taken into consideration, investment volumes soar even higher because of the strong US dollar. JLL calculates that those carried out during the first six months of this year are 19 per cent above those in the same period in 2014. And there’s little sign of activity levels abating despite what JLL refers to as “economic headwinds” such as rises in interest rates in the US and the Greek debt situation.


US top for investments

JLL reports that investment levels in the US were the highest globally with year-on-year transaction volumes growing by a massive 29 per cent. New York stands out at a particular investment magnet with this so-called ‘Super City’ experiencing its busiest six months of investment since 2006. Together with London, the world’s other top ‘Super City’, New York attracted 15 per cent of all global investment activity. According to JLL, investors are drawn to the liquidity and scale of New York and London investment markets plus their reputation as safe havens.


Investor appetite for rental apartments in the US remains high driven by the rise in employment opportunities – the unemployment rate in the US is currently 5.3 per cent – and changes in demographics. Demand for rental properties is high among the so-called Millennials (those born between 1985 and 1995) and this factor is also fuelling potential returns from rental property.


JLL reports that demand for apartments remains higher than supply, continuing a trend that first emerged in 2011. Availability has risen slightly in some areas, but in the US as a whole, rental vacancy rates sit at a very low 4.2 per cent. “Even as numerous markets are preparing to receive several thousand units delivered throughout 2015 and into 2016, strong demand persists from renters,” says Global Market Perspective Q3 2015.


Source: JLL

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