Investment markets to grow 15% in 2014 as demand continues to increase

February 14, 2014 / By

Investment markets have barely missed a beat over the holiday period as the momentum created towards the end of the year continues into the first few weeks of 2014. Final quarter volumes exceeded our expectations at US$198 billion, 41% higher than an already busy third quarter of 2013 and 22% ahead of a strong final quarter of 2012.

The consistent quarter on quarter growth we recorded all the way through 2013 took final year volumes to US$563 billion, 21% higher than 2012 and the first time the market has broken above US$500 billion since 2007. The growth in transactional volumes is broadly based with both large and small markets seeing growth across all three regions, a trend we expect to continue into 2014.

Volumes in Asia Pacific have now exceeded those recorded at the peak of the last cycle, the first region to do so. Final quarter transactions of US$37 billion, helped push full year volumes above the previous peak of US$121 billion in 2007 to US$127 billion. The major reason behind this record breaking year has been the resurgent investment market in Japan where volumes have doubled in local currency terms. Booming volumes in Japan were supported by record breaking years in Australia (US$22 billion), China (US$25 billion) and Singapore (US$12 billion).

While the major markets of the UK, France and Germany continued to grow during 2013 on the back of consistent demand for core product, 2013 has seen the return of the peripheral European markets, Ireland, Portugal and Italy all saw triple digit percentage growth. Final quarter volumes of US$72 billion are well ahead of the final quarter of 2012 and the fact that the previous three quarters all exceeded their 2012 equivalents has seen the market move 21% higher to US$195 billion over the full year.

In contrast to what we have seen in Europe and Asia Pacific the smaller markets of Latin America have not benefited from the growing investment markets to the North. Final quarter volumes of US$88 billion and full year volumes of US$241 billion were driven by the US (up 21%), Canada (up 19%) to a new record of US$18 billion, and Mexico (up 27%). We are now seeing consistent quarter on quarter growth in the US and the US$80 billion recorded in Q4 equates to a level of activity you would expect from the largest investment market in the world.

On the back of much stronger than expected growth in 2013, we predict global transactional volumes to be US$650 billion. The momentum of 2013 has been carried over immediately into 2014 with a number of new buyers emerging and vendors increasingly willing to offer product as pricing continues to improve. New capital sources are constantly entering the market especially in Asia where investors continue to look at opportunities in the US and Europe on the back of continued residential cooling measures in their domestic markets.

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