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October 9, 2016

JLL’s Q3 global transactional volumes record uptick as markets regain momentum ahead of pivotal final quarter.
Updated on 10/10/2016 at 4.20pm. 

With Brexit negotiations in the UK, a looming presidential debate in the U.S., Deutsche Bank shares dropping to an all-time low, and Japan announcing another monetary stimulus, Q3 has been a quarter characterised by political and economic uncertainty.

Despite this, the global real estate market held up well in the months from July to September, putting full year transaction volumes on track to achieve US$610-630 billion as we enter the pivotal final quarter, according to JLL.

The third quarter saw global investment activity of US$163 billion, just 5 percent below Q3 2015 and 6 percent ahead of the second quarter of this year. Overall, year to date volumes sit at US$454 billion, 8 percent less than the same period in 2015.

“Political and economic uncertainty may have occupied investors’ attention, and global bond yields saw  some of the steepest price declines of recent times but, in a low growth, low yield economic scenario, real estate looks attractive,” explains David Green Morgan, Global Capital Markets Research Director.

“The key is going to be the performance of some of the big markets in the final quarter, particularly the UK which historically has always performed well in the final few months of the year.”

“Though much of the global volatility from the first half of the year has continued, we see a realistic and comfortable cushion of activity ahead of year-end as a result of a better than anticipated Q3 performance.”

Europe and the U.S. have dominated much of the headline activity this year and Q3 was no exception.

Arthur de Haast, Head of JLL’s International Capital Group, said, “Bruised by Brexit, the UK real estate market has seen a sharp decline in investment activity in recent months with the latest figures showing volumes down by some 30 percent in local currency terms.”

“However, we have seen some international investors take advantage of the repricing and fall in the Pound to acquire assets especially in London.  There is additional product coming to the market in the next few weeks which will again be an important indication of buyer sentiment, who on the whole remain equity rich and keen to invest in real estate.”

Regional overview

EMEA

Europe was the only region to see a quarter on quarter decline with a 6 percent drop from Q2 2016 and 16 percent below Q3 2015 at US$53 billion. However, year to date volumes look slightly better at 10 percent below the same period last year at US$160 billion.  The UK market is the major contributor to the region’s dip, with volumes down close to 30 percent in local currency terms. However, removing the UK shows stability year-on-year with France and Germany running at roughly the same pace as 2015 and continued strong investor activity in Central and Eastern Europe, Holland, Russia and the Nordics.

Asia Pacific

Asia Pacific witnessed a pickup in activity from a year ago with US$32 billion recorded, 3 percent ahead of Q3 2015 and 14 percent up on Q2 2016.  This brings year to date volumes to US$86 billion, just 2 percent below the same period last year.  China was the most active market over the quarter with volumes up 40 percent over Q3 2015 on the back of an increase in portfolio transactions.  Despite the Yen strengthening in the last three months Japanese volumes remain subdued, with activity about 10 percent lower than 2015 over the first nine months.  Elsewhere Australia remains down over the year on a lack of stock while Singapore is seeing a resurgent market with volumes up over 40 percent year to date.

The Americas

Despite a slow start to the year, activity in the Americas picked up during the third quarter reaching US$78 billion, 2 percent ahead of Q3 2015. As a result, regional volumes for the year to date hit US$208 billion, 9 percent below the same period last year. Canadian activity has increased considerably, recording volumes 12 percent higher than Q2 2015, while Mexico remains the bright spot in Latin America with almost US$2 billion trading so far in 2016.

David Green-Morgan
Global Capital Markets Research Director

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