Global Real estate investment falls in Q1

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Global commercial real estate investment fell in the first quarter of this year, with some areas hit harder than others as the COVID-19 pandemic spread worldwide.

Direct investment in commercial real estate dropped 5 percent year-on-year to US$200 billion, according to figure from JLL.

The spread of the coronavirus has had an abrupt and widespread impact on financial markets around the world. Mounting evidence suggests that global economic growth contracted in Q1.

“Credit and equity markets were among the first to react, with REITs the first in our industry to experience the negative impacts of COVID-19,” says Sean Coghlan, Head of Global Capital Markets Research, JLL.
Across eight of the world’s largest REIT markets, total returns during Q1 on average fell 31 percent, according to JLL.

“No region felt the impact of the pandemic more immediatley than Asia Pacific, where the outbreak first started,” says Coghlan. “But the first quarter data lags the sentiment of the other two regions, which only started to feel the effects in March.”

In Asia Pacific, investment fell 26 percent year-on-year to US$34 billion in the first quarter. EMEA, on the other hand, saw an increase of 5 percent to US$67 billion. Investment in the Americas dropped 2 percent.

While there is no escaping the impact of the pandemic in the short-term, with the near-record volume of dry powder held by investors, global commercial real estate is still poised to see healthy investment over the long term.

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