After a record year in 2007 for direct real estate investment globally, with volumes up 8% year-on-year to $759 billion, the investment outlook for 2008 expected to be down over 30% on 2007. The Americas and European investment markets will certainly see a material decline in full year volumes and, although Asia may be more resilient, volumes will not achieve the heights of 2007, said Jones Lang LaSalle in its latest ?Global Real Estate Capital? report.
Reduced debt availability and investor confidence are likely to stay for much of the first half of 2008 as the impact of the debt squeeze continues to ripple through markets and central bankers and financiers work to stabilise and stimulate the debt markets. The situation is being exacerbated by unease about the global economy, in particular about major economies such as the US, the UK and Japan, said Tony Horrell, International Director and Head of European Capital Markets.
Jones Lang LaSalle sees a number of factors that will constrain volumes this year; buyers and sellers adopting ?wait and see? strategies; prices having peaked in 2007 in many major markets; a misalignment between buyers? and sellers? price expectations; reduced availability of debt, tougher lending criteria and increased debt costs; reduced willingness and capacity to transact large lots sizes, a narrower spectrum of investors; and more exacting due diligence which leads to longer transaction processes.
Whilst domestic investment remained at around $400 billion globally in 2007, similar to 2006 volumes, cross-border investment increased by $58 billion to $357 billion in 2007 and of that, inter-regional investment accounted for $242 billion. In percentage terms cross-border transactions now account for 47% of total transactions and inter-regional for 32% of total transactions.