London retained its position as the leading destination for global real estate investments in 2018, followed by New York and Paris. According to JLL, current trends reveal that the investors continue to prefer the cities with flourishing investment markets and high levels of transparency. These are cities with cities with a significant concentration of capital and potential.
Two Asian cities appeared in among top five cities with Shanghai retained its fifth position for the third year running, while Seoul jumped four positions to rank fourth. Most of the cities in the list have maintained top slots over the past 10 years, accounting for 30% of the total real estate investment.
According to the data, total investment volume for commercial real estate in 2018 was US$733 billion, which is a 4% increase from the previous year, and the best annual performance in a decade. Cross-border purchases accounted for 31% of activity last year, which suggests that investors still have appetite to buy properties outside their primary markets.
JLL forecasts that investment activity will remain the same in 2019 as real estate continues to attract more investors. However, overall global investment volumes are expected to fall between 5% and 10% from last year’s total in investors get more selective with their acquisitions and reduced incentives to sell.
Richard Bloxam, Global Head of Capital Markets at JLL, said, “In a year when investors have had to deal with increasing populism, protectionism, and political uncertainty, the appeal of real estate as an asset class has continued to increase. Interestingly, investors remain focused on gateway cities, despite tight pricing. Many are looking at alternative or emerging locations, as well as varying real estate property types within these cities, rather than exploring other less familiar cities. A notable trend is that half of these established gateway cities are in the Asia Pacific. Increasing transparency in these markets is encouraging more investment, moving these cities even higher up the rankings in 2019 and beyond.”
The commercial office sector in gateway cities is likely to account for a higher percentage of investment volumes at 68% compared to 51% in 2018. Other asset classes such as student housing, senior living and multi-family also attracted more institutional money in 2018 and this trend is expected to continue in 2019.