Report Says Global CRE Recovery "Uneven"

10/28/2010 | By Allen Kenney

Report Says Global CRE Recovery "Uneven"
A steadily growing number of commercial real estate transactions are occurring around the world, but not all regions have seen uniform improvement, according to a report from research firm Real Capital Analytics (RCA).

Specifically, while activity was heating up in the Pacific Rim and Americas during the third quarter, sales in Europe, the Middle East and Africa were declining.

Global property sales measured $132.3 billion in the third quarter by RCA's calculations, marking a 22 percent increase in year-over-year transaction volume. RCA noted that the pace of improvement was actually moderating, as year-over-year gains in transaction activity fell from 134 percent in the first quarter to 43 percent for the second quarter to the third-quarter level. Through the first nine months of 2010, the $378.5 billion in sales worldwide represented a 56 percent increase from the same period a year earlier.

Additionally, RCA said its data indicated that the average transaction price in 2010 had climbed from 2009.

In RCA's region encompassing Europe, the Middle East and Asia, sales of $31.1 billion signified a modest decline of 10 percent from the first two quarters of the year. RCA attributed the slowdown to Europe's sluggish economy. "Europe's economic woes have taken a toll on investor interest, undercutting investment in the period since the onset of the sovereign debt crises," RCA said in its report.

However, RCA did note that year-to-date property sales of $100.4 billion in the region marked a 33 percent on the same period a year earlier. The region's increased year-over-year transaction volume "reflects early momentum in transaction activity that has since softened on a slowdown in economic growth," RCA said.

Meanwhile, the Asia-Pacific region saw its transaction activity grow 43 percent between the second and third quarters of 2010. RCA called the fourth quarter outlook in the area "upbeat."

The Americas region enjoyed its best quarter since 2008. The region's $32.7 billion in sales doubled the year-earlier period and marked a 33 percent gain over the previous quarter's $24 billion. Through the first nine months of 2010, the Americas' transaction volume had reached $75.9 billion. Relative to the year-prior period, volume was up more than 100 percent.

"Clearly showing that its recovery has gained traction, the Americas entered (the fourth quarter of 2010) with strong positive investment momentum across all income-producing property sectors," RCA said.