The global value of Commercial Real Estate (CRE) investment transactions decreased by 9% on Q1 2016 to USD 179 billion in Q1 2017 (see Figure 1: Commercial Real Estate Investment)1. This decrease is mainly due to weakness in the Americas. Transaction volume in EMEA was flat in Q1 2017 on Q1 2016, while APAC showed a steady increase in Q1 2017. Although this is a weaker Q1 than last year, it still represents a healthy level of capital markets activity and is 25% above the 10-year first quarter average.
Transaction volume in the EMEA region was flat in Q1 2017 on Q1 2016. The result was impacted by continued weak activity in the U.K., where investment transactions were down 17.7%. Excluding the U.K., investment values in EMEA showed an increase of 11.5% in Q1 2017 on Q1 2016, with strong growth in markets such as Germany, Spain, and in Central and Eastern Europe, a trend that continued from last quarter.
Investment in the APAC region continued to show growth of around 7.2% in Q1 2017, which was boosted by an increase in large deals, especially in Singapore and Japan. The uptick in Singapore and Japan is interesting given that Japan and Singapore were among the declining markets in Q4 2016. Similarly, strong markets in Q4 2016, such as China and South Korea, showed a decrease in Q1 2017 on Q1 2016. The latter resulted in a drop of 24% and 43% (in local currency units), respectively, for China and South Korea, and had a negative contribution to the Q1 2017 total.
In the Americas, investment activity was subdued due to a drop in activity in the U.S. of 16.8% in Q1 20172. When we exclude entity level transactions from the total, the Q1 decline reduces to -13% in Q1 2017 on Q1 2016. Again, though weaker than 2016, this investment figure is above the 10-year average for Q1 investment volumes. Finally, it should be noted that the Q1 2017 estimate is likely to be revised up as further information on non-U.S. markets becomes available.
All comments (and quoted changes) relate to the trends as measured in fixed U.S. dollar exchange rates unless otherwise stated.
It should be noted that “Entity Level” transactions are included in these figures, whereas they are excluded from the Americas figures reported with CBRE’s earnings release.
For the calculation of fixed exchange rate totals, all local currency values are converted to USD using the average FX rate in Q1 2017.