Which real estate sectors are hot for investors?

Retail is continuing the inroads it has made in recent years, reaching almost 30% of total transactions in 2011.

According to Jones Lang LaSalle, 2011 did not see any dramatic break with recent history in that the office sector continues to be the favourite with investors, although retail is continuing the inroads it has made in recent years, reaching almost 30% of total transactions in 2011, the highest we have recorded.

Mixed use sites were the big losers this year with transactional volumes down 35% from 2010, and down over 50% from Q3 to Q4 2011. Mixed use sites have been a feature of developing markets over recent years, but with cooling measures in place in many APAC countries and a lack of debt in Europe, it is these larger schemes that are
being shunned at present.

Investment into the office sector in 2011 reached $189 billion, up 20% on 2010 and almost 70% higher than 2009’s $112 billion; and only slightly behind the 2008 volumes of $200 billion. While recovery has been encouraging office transactional volumes are still less than half of the $416 billion we recorded in 2007, whereas overall real estate volumes are now at 54% of 2007 levels. Retail, industrial and hotels have all taken market share away from the office sector over the last two years.

The retail sector in Europe and the Americas  recorded significant increases on 2010  transactional levels, up over 40% in Europe and  96% in the Americas. In both regions volumes are now approaching those at the top of the market in 2007, this at a time when retailers on both sides of the Atlantic are suffering from anaemic growth
in retail sales and a rise in internet shopping.

Retail illustrates the point perfectly that investors are returning to core, developed markets at the expense of new emerging countries, even when growth projections are weak in these developed markets. 

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