Gareth bale brings life back to distressed property markets
October 21, 2013 / By David Green-Morgan
Following several years of declining prices and an almost total lack of transactional activity, two seismic events have triggered renewed activity in the Spanish commercial property market. The arrival of Gareth Bale at Real Madrid was quickly followed by the news that Cristiano Ronaldo has been made the best paid footballer on the planet. The outcome of this renewed level of liquidity in the Spanish economy is a 56% increase in commercial property transactions in Spain compared to this time last year, and signs of hope for all of Southern Europe.
Although probably coincidental to the comings and goings of the football transfer market, the return of investor activity to Spain, Portugal, Greece and Italy in addition to smaller cities in the major economies of the world is a major reason why global commercial transactional volumes have continued their growth during 2013. Year to date volumes are now at US$361 billion and with the busy fourth quarter ahead of us we look set to pass US$500 billion for the first time in six years.
Q3’s numbers are $136 billion up 36% compared to Q3 2012 and 20% higher than the year to date 2012. This result is well ahead of our expectations for the quarter and shows the continuing increasing allocations to commercial real estate. The only region to see a decline quarter on quarter was Asia Pacific, where a slowdown in the frantic pace set by Japan this year was a major reason for the slower volume growth.
The upside came partly from Europe where the usually quiet summer season was ignored and volumes came in 17% higher than the second quarter of the year. The three big markets of the UK, France and Germany performed well but with more transactions outside of the bigger cities, activity was also supported by further investor interest in Southern and Central and Eastern Europe.
Despite all the political issues in the US, and rising costs of debt in the first half of the year, volumes continue to grow with a 43% increase compared to the third quarter of 2012, Canada is also maintaining the strong pace it set last year. Activity outside the US and Canada is more sporadic with Latin American volumes supported by a few large portfolio deals in Mexico this quarter.
With this increasing level of activity recorded for Q3 we have revised our forecasts slightly to reflect the positive momentum, we now expect global volumes for full year 2013 to be between US$475-500 billion, rather than US$450-500 billion. Our expectation is that we will get very close and may even exceed the US$500 billion mark for the full year 2013.
