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The Warsaw Voice » Real Estate » March 18, 2009
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Global Commercial Property Investment Plummets
March 18, 2009   
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Global investment in commercial property fell 59 percent last year to $435 billion from a record $1,050 billion in 2007, according to international property advisers Cushman & Wakefield.

Last year's investment was the lowest annual total since 2004, with a significant decline in investment from foreign investors, according to Cushman & Wakefield's Investment Atlas 2009.

The report predicts that volumes will again fall again this year, to around $412 billion. The largest fall in 2008 was in North America with a 73 percent drop in investment from $437 billion to $116 billion. As a result North America ceded its position as the top global investment target in 2007 and fell to third place last year behind Europe and Asia.

There were also large falls in investment outside of North America with Europe declining 52 percent to $178 billion (down from $367 billion) and Asia declining 45 percent to $131 billion (down from $237 billion). Latin America proved to be the most resilient market with investment falling 9 percent to $8.9 billion (down from $9.8 billion). As the world's most popular investment destination, Europe accounted for 41 percent of all transactions, followed by Asia with 30 percent.

David Hutchings, head of research for Cushman & Wakefield EMEA, said, "Although virtually all global markets had a decline in investment, it's been the mature markets which have suffered most. Emerging markets now account for 22 percent of global investment when as recently as 2006 they only accounted for 9 percent. China is by far the most dominant of these markets but Russia, India and Brazil all increased their share of investment, coming in at 15th, 16th and 20th overall."

Hutchings added, "It is clear that pricing in many countries at the market peak was aggressive and became divorced from the reality of underlying growth and income that could be produced and sustained. It is equally true, however, that pricing may now be becoming too conservative in some markets, again ignoring the fundamental potential of the underlying market."Hutchings said he believed that mature markets were now at least half way through the pricing correction. "Globally however, it is likely to be those countries which fell first that will also be the first to recover. The US and British markets are likely to be favored, certainly by the latter half of 2009, and investors are already identifying value opportunities there. We also expect to see a slight improvement in demand in France and possibly Germany later in 2009 after further falls in activity in the next few months.

"For most global markets in fact, a recovery in activity is likely in the second half of 2009, even though a recovery in performance may largely wait until mid-2010 when rental levels start to stabilize."
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