Arabian Post Staff -Dubai
Data from property consultancy JLL showed overseas investment into Asian property quadrupled to $19.3 billion, while cross-border investment in Europe increased 31 per cent to $39.9 billion. The figures point to a marked revival in international capital deployment after a prolonged period in which high interest rates, valuation uncertainty and tighter financing conditions constrained transactions.
The improvement was more pronounced than the rise in overall commercial property dealing. Separate MSCI data showed global building transactions increased 10 per cent year on year to $604.6 billion during the same six-month period, indicating that cross-border investors returned to the market at a faster pace than domestic buyers overall.
Premium office assets were among the beneficiaries. JLL said international investors became more active in major European cities including London and Milan, reflecting renewed interest in well-located buildings with strong occupancy prospects and high-quality tenants.
Fraser Bowen, a director in JLL’s capital markets business, said there had been “a re-emergence of the office sector”, with foreign buyers showing greater willingness to pursue large transactions in established markets. Office investment has also strengthened more broadly across Europe, where separate CBRE figures showed total real estate investment reached €116 billion in the first half, 10 per cent higher than a year earlier.
Singapore recorded the largest cross-border commercial property investment volume globally, attracting $8.7 billion during the first six months, according to JLL. The city-state has also been a major contributor to the wider rebound in Asia-Pacific property markets, where investment activity reached its strongest first-half level in several years.
JLL’s regional figures showed Asia-Pacific commercial real estate investment totalling $92.5 billion in the first half, up 35 per cent year on year. The second quarter alone produced $45.5 billion of transactions, a 38 per cent increase, while the first quarter had already delivered record activity for that period.
The return of international money has coincided with improving liquidity in several property segments. JLL said global capital markets activity strengthened through the second quarter as debt markets remained active, capital became more available for deployment and larger transactions returned. Its research also indicated that investment growth broadened across retail, industrial and logistics properties, hotels and offices.
The office recovery nevertheless remains selective. Buyers have concentrated on prime buildings, major cities and assets where income visibility is relatively strong, rather than returning uniformly across the sector. High vacancy levels in some markets, uneven leasing demand and refinancing pressures continue to influence pricing and investment decisions.
Borrowing costs are also emerging as a potential constraint on the pace of cross-border transactions during the second half. Commercial property values and deal volumes remain sensitive to interest rates because acquisitions are frequently financed with debt and because higher bond yields can reduce the relative attraction of property income.
Bowen said transaction volumes remain closely correlated with interest rates, suggesting the acceleration recorded in the first half may face pressure if financing becomes more expensive. JLL’s latest global market assessment similarly identified higher rates and geopolitical uncertainty as risks, even as it described investment sales activity and credit markets as increasingly aligned.
Regional differences remain substantial. Europe has seen foreign capital return strongly to several large markets, while Asia has benefited from large transactions in highly liquid centres. Italy, for example, recorded about €7.8 billion of real estate investment in the first half, with international investors accounting for 75 per cent of the total, according to JLL.
Other Asian markets have also reported stronger transaction activity, although the balance between domestic and foreign investors varies sharply. Some markets continue to be driven mainly by local institutions, developers and private capital, while cross-border buyers have focused on assets offering scale, stable income or opportunities to reposition buildings.
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