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real estateFebruary 23, 2021

Real estate investment volumes in Middle East, Europe, Africa fall 17% to $282bln

JLL warns ongoing wave of lockdowns could pose risks to recovery


Real estate investment volumes in the Middle East and around the world declined significantly in 2020, as the coronavirus restrictions and poor economic conditions dampened sentiments and demand.

Investment volumes across Europe, Middle East and Africa (EMEA) reached $282 billion in 2020, marking a 17 percent decline year-on-year, according to JLL’s recently published Global Real Estate Perspective.

Worldwide, transaction volumes dropped 28 percent to $762 billion from a record amount of capital markets activity in 2019.

Activity has recently picked up, with global investment volumes reaching $267 billion during the fourth quarter, an increase of 65 percent from previous quarter in 2020. However, JLL noted that the ongoing wave of lockdowns, coupled with depressed economic conditions, could continue to pose risks to recovery.

Confidence

Among the major markets, France, Germany and the United States registered transactions worth $150 billion during the last quarter, representing an increase of 81 percent on the third quarter.

“As 2020 progressed and the pandemic matured in markets, investors have learned to better navigate the uncertainty. This confidence was reflected in higher levels of capital deployment in the latter part of the year,” said Sean Coghlan, global director for capital markets research and strategy at JLL.

JLL said the improvement in activity was most evident in certain segments of the market, including logistics and multifamily sectors and high-quality assets.

Optimism improving

“Despite the divergence in many parts of the market, optimism continues to improve on the heels of recovering liquidity, and the low cost of debt is supporting cap rate compression in sectors with growth and favourable demand outlooks,” said Coghlan.

JLL also noted that based on its interactions with investors, “optimism continues to improve” on the back of deeper liquidity and as measured by increased bidding activity globally.

“However, signs of improvement in the capital markets could be impacted by the ongoing wave of lockdowns and depressed economic conditions,” it added.

zawya