THE worldwide value of commercial real estate investment transactions surpassed $200 billion in the third quarter of 2016, global real estate consultant CBRE Group Inc. reported last Friday, suggesting that the performance was an indication that the market has stabilized after a drop in transactions at the start of the year.
The Asia-Pacific (APAC) region was the most active, showing steady growth compared with the Americas and the Europe, Middle East, and Africa (EMEA) regions, CBRE said.
“Investment in the APAC region has rebounded quite strongly over the past two quarters,” the report said. “Over the past two years, the trend in APAC has differed from the Americas and EMEA.”
CBRE explained that in 2015, transaction levels in the APAC region showed no increase from 2014, but in 2016, investment bounced back after a particularly low total in Q1 2016, which seemed to have been a low point for the year, the consultancy group said.
On a quarter-to-quarter basis, transactions in the APAC region were up by four percent in Q3 (denominated in local currencies), after an 18 percent increase the previous quarter, CBRE said. In contrast to EMEA, exchange rate movements meant that these increases are even bigger when measured in US dollars, as the Japanese Yen and the Australian dollar both strengthened against the US currency, the report explained.
Activity in the EMEA region, dominated by Europe, continued to show a downward trend, falling by 8 percent compared to Q2 2016 and by 18 percent compared to Q3 2015. Due to exchange rate effects, the EMEA decline was greater when measured in US dollars, and particularly over the longer term—21 percent versus Q3 2015. Weakness in the UK market was a significant driver of the drop in EMEA activity, CBRE. Investment transactions have been slowing since mid-2015, but that trend accelerated in H1 2016 and continued after the referendum result at the end of June. Excluding UK transactions, EMEA showed a year-over-year decline of 14 percent.
In the Americas, the value of transactions rose by just one percent during Q3 2016. For the Americas, a feature of H1 2016 was the extent to which the value of portfolio and entity level transactions dropped off, CBRE said. Values were more resilient among single-asset transactions while dropping significantly for more complex deals. The aggregate value of entity and portfolio transactions showed a year-over-year drop of 36 percent in Q2 2016; in Q3 2016 there were some early signs of a reversal, with the rate of decline falling to 8 percent, the report concluded.