RCA Insights

Q3 2016 Global and Asia Pacific Capital Trends: Global Activity Dips, Some Countries Shine

By on November 3rd, 2016

Global commercial real estate investment fell 15% year-over-year in Q3’16, the new edition of Global Capital Trends shows. For the first nine months of 2016, total global volume fell 11% versus the same period in 2015. Of the regions, EMEA was the worst performer for the quarter and for 2016 so far.

Part of the slowdown can be attributed to global cross-border capital flows, down 32% compared with the first nine months of 2015. Cross-border investors have remained active net buyers but at lower levels than previous periods. In the Asia Pacific Capital Trends report we note that cross-border flows increased as a share of total investment volume; however, this reflects the decrease in total purchases by domestic investors.

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China outperformed in Asia Pacific, recording a 28% YOY increase in direct real estate transactions in Q3’16. With now one-fifth of the overall activity in the region it has overtaken Australia as the second most active Asia Pacific market. While overall volumes in Asia Pacific were boosted by a string of large portfolio deals in China and Japan, concerns about political, economic and financial risks are still challenging investment decisions.

The Americas as a whole was boosted by strength in Canada – up 17% YOY in the quarter. Investment volume in the U.S. was flat in Q3’16 compared with 2015. In EMEA, the three largest investment markets – the U.K., Germany and France – all saw volumes decline, with the U.K. and France down about 50% in Q3’16.

London has fallen further down the ranking of global top markets. From a #3 spot at midyear London is now at #4 behind New York, Los Angeles and San Francisco. Nine of the top ten global markets recorded shrinking volume for the first nine months of 2016 – London’s was the sharpest decline at 56%.

Looking ahead we can already predict that Q4’16 volumes will look weak in comparison with the exceptionally robust activity recorded in Q4’15. But despite that, 2016 will be a strong year compared with historical averages.

If you are a current RCA subscriber log into your account to download the Q3’16 reports.

Simon Mallinson

Executive Managing Director, EMEA & APAC
smallinson@rcanalytics.com

Based in London, Simon Mallinson joined Real Capital Analytics in January 2013. Simon has board level responsibility for EMEA and APAC, with a particular passion for the continued development of RCA’s industry-leading client service and capital markets analytics.

Previously, Simon was Senior Director leading European Research at Invesco Real Estate. Prior to Invesco, Simon held a number of roles with IPD (now part of MSCI) in London and the United States. As Head of US Services, based in Chicago, he established IPD’s first North American office.

Simon is a Board Member of US association NCREIF, a member of RICS and is active across a number of other global real estate associations. He holds degrees from both Leeds and Manchester University, UK. Simon has set foot in 48 U.S. states and is looking for an excuse to visit Maine and Alaska.