The Hindu Business Line : Global investment in real estate touches $457 b in '04

In Asia-Pacific, the total real estate investment of $48.3 billion represented a 74 per cent increase over 2003. Of this, 24 per cent came from cross-border investment, which has grown by over 146 per cent to reach $11.5 billion.

New Delhi , Aug. 19

GLOBAL investment in real estate has increased by 12 per cent year-on-year to $457 billion in 2004 with Asia Pacific accounting for 11 per cent, according to a report by the international real estate consultant Jones Lang LaSalle.

The report — `Global Real Estate Capital - Travelling Further to Return Stronger' — also identified that 60 per cent of cross border investment ($60 billion) took place region-to-region.

This showed that investors seeking international diversification are more likely to do so across continental boundaries rather than within their own region.

The bulk of the cross-border activity came from North American investors. Amongst all the real estate sectors, the office market was the most highly traded asset, accounting for 45 per cent of all capital market flows in Asia-Pacific.

According to Mr Mridul Upreti, Head, Corporate Finance and Investments, at Jones Lang LaSalle in India, the investment interest in the country comes primarily from US opportunity funds, the US and the UK private equity and venture capital firms.

"The clearance of the proposal for 100 per cent foreign direct investment (FDI) in construction and development projects in India, which was announced early this year has given a boost to foreign investments in the country. Looking ahead, we expect to see exponential growth in foreign investments across four to five key markets in India. These will be focused on suburban business parks, large residential schemes, city centre mixed-use schemes with hotel/serviced apartment components," he said.

There could be further acceleration of investment interest in shopping centre development projects in India, pending a proposal on easing of foreign investment rules in the Indian retailing industry, Mr Upreti noted.

The report also stated that about five per cent of the `global investible universe' was traded in 2004, and that cross-border investment totalled $99 billion, with rapid growth in Asia-Pacific and North America. The North American investors were the key source of capital in the global investment market, and Europe was the most active location for cross-border investment.

On the future trends, it said strong real estate performance over the short to medium term was expected to emerge as market cycles offered upside opportunities and investor demand continued to exert downward pressure on yields.

In addition, capital allocations to global real estate are expected to grow as equity continues to flow from pension funds and low interest rates fuel the debt-driven sector, reinforcing yield compression and positive returns, it added.

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