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Global transaction volumes for commercial property are set to grow by at least 15 per cent this year, taking the annual total to more than $600 billion (Dh2.2 billion), according to Knight Frank's latest Globa Capital Markets report.
Global transaction volumes for retail, offices, industrial and hotels amounted to $536.7 billion last year, a rise of 18 per cent on 2012 and the highest total since 2007.
US and UK targets
The amount of investment capital emanating from China and the Middle East has increased sharply. Real capital analytics data shows that Chinese investment in global markets tripled to at least $14.3 billion last year. Over the same period, Middle Eastern sovereign wealth funds doubled their acquisitions to $18.8 billion, with the UK and US as firm targets. This trend is expected to continue apace, with the range of target markets likely to broaden.
Joseph Morris, Knight Frank's Director of Capital Markets, said, "Property yields continue to offer a significant margin over government bonds in most markets. While pricing at the prime end of the market will remain keen, yield compression will slow, as investor attention gradually shifts towards higher-yielding opportunities, which offer good prospects for growth."
Real estate attraction
Khawar Khan, Knight Frank's Research Manager for the Middle East, said, "The weight of capital seeking exposure to real estate continues to increase, with investors being drawn to the asset class by its income-producing qualities, the improving availability of debt and a steady recovery in global occupier markets.
“As a result, global investment volumes should comfortably exceed the $600-billion mark this year."
Source: Property Weekly