London retains position as top city for global real estate investment

/ EdgeProp Singapore
January 22, 2019 5:27 PM SGT
Increasing global trends of populism, protectionism and political uncertainty are driving real estate investors to invest in well-known, gateway cities despite the tight pricing there, according to a report by JLL. Many investors are shunning less familiar cities, but are also exploring alternative or emerging locations within global cities, as well as varying property types.
London retained its leading position as the top city for global real estate investment in 2018, followed by New York and Paris. Two Asian cities appeared in the top five cities: Shanghai retained its fifth position for the third year running, but Seoul jumped four positions to rank fourth. “Increasing transparency in these (Asia-Pacific) markets is encouraging more investment, moving these cities even higher up the rankings in 2019 and beyond,” says Richard Bloxam, global head of capital markets at JLL.
According to JLL, total real estate investment volume last year was US$733 billion ($997 billion), which is a 4% increase from the previous year, and the best annual performance in a decade. Cross-border purchases accounted for 31% of activity last year, which suggests that investors still have appetite to buy properties outside their own markets.
JLL expects investment activity to be maintained in 2019 as real estate continues to look more attractive than other asset classes. However, overall global investment volumes are expected to fall between 5% and 10% from last year’s total, due to slightly reduced selling appetite from investors, as well as continued selectivity in acquisitions.
Asset classes such as student housing, senior living and multi-family attracted more institutional money in 2018 and this trend is likely to continue in 2019. Meanwhile, the office sector in gateway cities is likely to account for a higher proportion of investment volumes: 68% in 2018 compared to 51% globally.
Industrial real estate accounted for 17% of all investment, up from 10% in 2009. In contrast, the retail sector has seen less activity as investors adjust their investment approaches to reflect changing consumer behaviour.