Global direct real estate investment recovered to pre-recession levels in 2014 and should reach $1 trillion per annum within the next five years, a report by JLL reveals. According to the real estate investment consultant, about 50 percent of investments are concentrated in 30 cities across the globe.
The report, which was published during the World Economic Forum annual meeting in Davos, Switzerland, reveals that robust economic development and market conditions have driven the total amount of real estate investments to an estimated $700 billion (£464 billion), a level not seen since 2006. JLL sees property investment increasing by 10 to 15 percent this year and reaching $1 trillion annually by the turn of the decade.
JLL chief executive officer Colin Dyer writes in the report: ”We expect investments to continue to grow because the market is on a sounder, more sustainable footing than it was before the recession and has more robust controls and scrutiny on investments.”
The research focuses on 30 cities that have together received about half of the total $5 trillion in direct commercial property investments over the past 10 years. Four “supercities” – London, New York, Tokyo and Paris –have held places at the top of the rankings in recent years.
But the report also notes an overall market shift as investment in second-tier cities ballooned over the past year, especially in Europe. The number of transactions in London and Paris dropped 17 percent year on year but increased 37 percent in the next-ranked 20 cities.
Investment growth was also seen in cities such as Dublin in Madrid which were virtually no-go areas a few years ago. Dublin also had the world’s fastest growth in office rents over the past year, as the Irish real estate investment market staged a recovery in 2014 .