A new report released by Jones Lang LaSalle has revealed that investors are eager to put more capital into the commercial real estate market.
The Asia Pacific market is an especially active one and the company estimates that by the year 2030 direct commercial real estate transactions will reach the $1 trillion per annum level. In 2012, sales volumes were close to US $450 billion.
The report, entitled, The Advancement of Real Estate as a Global Asset Class found that:
Commercial real estate investors are focusing their attention on a limited number of prime assets.
Retail and office buildings, especially in major gateway cities, are in high demand. Stable, fully-leased assets are particularly in demand. When properties matching this profile come onto the market, bidding can drive prices up to pre-crisis levels. In some cases, it can even drive the purchase price over the 2007 levels.
With bonds offering low yields, investors are looking for opportunities to diversify. The real estate market offers the potential for higher yields than a traditional portfolio composed of bonds and equities.
According to the report, the Asia Pacific region will be the long-term winner in the worldwide contest for investment capital. Strong economic growth in that part of the world has contrasted with the recession that has affected North America and Europe.
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