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May 10, 2019

Global real estate markets remain liquid but investors are increasingly selective as caution builds over this cycle’s longevity.

Global markets kicked off the year on a relatively quiet note as year-on-year investment dipped by 8 percent to US$156 billion, according to JLL’s Global Capital Flows Q1 report.

The decline was driven primarily by major markets in EMEA and the Americas. On the other hand, Asia Pacific continued to enjoy a record-breaking streak as investment volumes hit a first-quarter high in Q1 2019.

Slowing macroeconomic growth in of the world’s advanced economies coupled with continued political uncertainty is weighing on markets. Questions still surround Brexit and U.S.-China trade tensions, while the recent global rally in sovereign bond markets further signaled that  many investors are concerned about global growth prospects.

Despite these concerns, global commercial real estate is poised to maintain its stable performance, says  Pranav Sethuraman, Global Capital Markets Research at JLL.

“Though property yields continue to be compressed, falling risk-free rates have helped to stabilize or, in some cases, widen spreads, keeping real estate investment an attractive option for investors,” he says.

Given the uncertainly, JLL forecasts expect global investment in commercial real estate to decline by between 5 and 10 percent, to around US$690 billion.

“Much of this decline will be driven by weaker activity in the Americas and EMEA, particularly in the retail and office sectors, while Asia Pacific is likely to continue to outperform thanks to bright growth prospects across much of the region,” says Sethuraman.

Click to download the full Global Capital Flows Q1 report, take a quick glance at the headlines, or view the interactive flows map. 

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Pranav Sethuraman

JLL's Global Capital Markets team

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