The volume of investment transactions in the global commercial real estate market in the 1st quarter of 2019 amounted to € 138 billion, which is 8% lower compared to the same period last year. Tokyo became the leader in terms of transaction volume, despite a decline of 28% compared to Q1 2018; investment in city facilities amounted to € 5,77 billion. The main reason for the decrease in the volume of global transactions was the weakening of investment activity in America and European countries.

World dynamics

The region of the Americas in the first three months of 2019 attracted 8% less investment compared to the same period last year: the volume of transactions in the real estate market here amounted to € 55 billion. The deterioration rate at the beginning of the year was noted in many large countries in the region, including in the United States (-5%), Canada (-17%), Brazil, and Mexico (-76%).

The result of investment activity in the Europe, Middle East, and Africa (EMEA) region in dollar terms was the weakest since the 2nd quarter of 2016, having decreased by 22% over the year to € 44,5 billion. The main continental markets of the region showed a significant decrease in the volume of transactions in the 1st quarter of 2019: UK, Germany, and France fell by 18%, 20%, and 21%, respectively.

At the same time, there was growth in some markets, including in Sweden (+ 58%), Russia (+32), Ukraine (+54%), and even a doubling of the volume of transactions, for example, in Bulgaria (+117%) and Czech Republic (+109%), but this dynamics was the result of the low base of the previous year and did not affect the growth of the aggregate regional indicator.

The only region that has increased the volume of investment transactions in the real estate market in annual terms, was the Asia-Pacific. The figure here increased at an annual rate of 14% and amounted to a record € 40 billion for Q1. The main driver of growth in regional investment was China, where transaction volume added 106%, Singapore (+71%), and South Korea (+28% ). Despite the positive dynamics of the aggregate indicator, the results of Australia, Japan, and Hong Kong have deteriorated compared to the same period of the previous year.

A Leaders’ Team

For the second year in a row, Tokyo has been the leader among cities in terms of investment activity in the 1st quarter. In addition to it, Shanghai entered the top 3 largest investment markets from Asian cities, which rose four lines in a year and took 2nd place with an investment volume of € 5,5 billion.

But New York fell to 3rd place (€ 5 billion), and London – the leader in 2018 among the cities with the highest investment activity – took only 4th place (€ 4,8 billion) in the 1st quarter of 2019; in the 1st quarter of 2018, the city was the third with € 6 billion in transactions. Closes the top 5 another representative of the Asian region – Seoul, which for a year rose from the 9th line; the investment indicator at the same time increased from € 3 to 4 billion.

Here is a full top 10 cities list:

• Tokyo;
• Shanghai;
• NY;
• London;
• Seoul;
• Hong Kong;
• Los Angeles;
• Silicon Valley;
• Shenzhen;
• Seattle.

In almost all segments, there was an annual decline in transaction volumes, especially in commercial real estate (-21% annualized), as investors adjust their preferences to reflect changes in consumer behavior. The only sector in which investments have increased is multifunctional complexes (+73%).

Traditionally, in the largest cities, the office sector accounted for the largest share of investment; however, the volume of transactions in office facilities showed a decrease of 7% compared to the first quarter of 2018, to € 66,5 billion.