The preliminary numbers for the third quarter of 2012 show that commercial property transactions have reached a level of consistency. The US$96 billion we have recorded is the eighth consecutive quarter where commercial transactions globally have been around the US$100 billion level. Even allowing for the boom and bust years of 2006-2009 the market is back to the long term average for global commercial property transactions of between US$400-450 billion per annum.
On a regional basis it is the Americas that is showing the most consistent year on year growth, while EMEA and Asia Pacific are slightly behind compared to a very busy 2011 for both regions. The Americas growth of 8% year on year is founded on the back of its two biggest markets, the US and Canada. This picture is consistent with what we are seeing globally in that larger more liquid markets are tending to see more deal flow than the more volatile, emerging or developing markets. These smaller, less transparent countries tend to be characterised by large one off deals that can distort the underlying level of activity. Brazil is a good example where two quarters of significant activity in Q4 2010 and Q1 2011 have increased expectations. Now markets have returned to more normal levels of activity there is a feeling of a slowdown rather than one of more normal activity.
As forecast at the start of the year, European volumes are down by 20% year on year, although Europe more than any of the other regions tends to benefit from a more active final quarter. In 2010 there was a US$20 billion difference between Q3 and Q4 activity while this reduced to US$4 billion in 2011; the final quarter is usually the busiest of the year.
Transactional activity in Asia Pacific is stable and only 4% behind the good level of activity that was recorded in 2011. It is unlikely that the region will beat the almost US$100 billion recorded last year but looks set to match our start of year forecast of US$88-90 billion. There is increased volatility in the region this year with even the larger markets of Japan and China showing significant changes in activity quarter on quarter. This is maybe to be expected in a region where central government policy plays such a large part in investor confidence and where the performance of the Chinese economy plays such a dominant role in investor expectations.
In order for the full year to match our US$400 billion forecast we need US$110 billion to be transacted in the final quarter, which is less than was transacted in the final quarters of 2010 and 2011. While the economic outlook remains uncertain and regional issues are complex the commercial property transactional market seems to have found a consistent level of activity.
