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2012 Global Real Estate Market Will Be Reverse Image of 2011
13 Mar, 2012, New York
2012 will be a reverse image of 2011, and a tale of two halves for the global economy and the
world's commercial real estate markets, according to global real estate services firm Cushman
& Wakefield's
latest MarketView report. While there was a healthy start for 2011, rising uncertainty
surrounding the resolution of sovereign debt issues in Europe and the U.S. led to a slowdown in
the economy and commercial real estate activity in the second half of the year. The exact
opposite performance is expected for 2012, with a sluggish beginning giving way to improvements
in the latter half of the year.
"Despite uncertainties, there remains a well of pent up demand in most nations," said Glenn Rufrano, President and Chief Executive Officer of Cushman & Wakefield. "As the year progresses and uncertainty subsides, improving economic conditions will support a boost in commercial real estate activity."
The main economic and market drivers for the year will be continuing strength in Asia from local demand growth, steady growth in the Americas and weakness in Europe, as sovereign debt issues continue to take a toll. The approach each region takes to reducing its debt issues will be a critical determinant of its economic performance.
Six key trends will define the global real estate market in 2012:
1. Linked Economics But with Regional Differences
As the global financial system continues to become more integrated and trade flows expand, the
macro linkages between economies will increase. However, the three main global regions? very
different public debt profiles will result in very different prospects for 2012.
2. Timing: First Half Second Half
While the second half of 2012 is expected to be much stronger for the global economy and real
estate markets, prospects vary by region.
3. Risks
For the global economy to improve there needs to be movement toward resolution of debt issues
in Europe and the U.S., or at the very least, rising confidence that a solution will be
achieved.
4. Real Estate Opportunities
The evolution of the global economy will likely provide opportunities in 2012 for both real
estate investors and occupiers. Deleveraging will lead to opportunity for investors, as
European financial firms come under pressure to dispose of assets to increase capital, with
real estate likely to be among those assets sold.
5. Improving Real Estate Fundamentals
Despite regional differences and early year weakness, the global office leasing market will
experience declining vacancy rates and rising rents in 2012, although the pace will vary by
region. While the softer global economy is likely to lead to sluggish performance of industrial
markets in Asia and Europe, the greatest opportunity is foreseen in North America, where supply
growth has been limited and rising demand may lead to higher trade volumes and industrial
output.
6. Active Investment Markets
2011 saw a 14 percent increase in global investment sales to $808 billion. For 2012, a 7.5
percent increase is anticipated, for a total of $867 billion in sales. More product will be
brought to market as institutions are in better positions to dispose of assets. While sales are
projected to be flat in Europe - at approximately $198.5 billion - and even in Asia - at $374
billion - investment activity in the Americas is forecast to increase 25 percent over 2011
levels, to approximately $295 billion.
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