Commercial real estate investment surged by 74% in 2017

The office segment performed strongly but retail continued to decline.

Commercial real estate investment volume increased by 74% in 2017 thanks to a number of record-breaking transactions and return of PRC capital in the second half of the year, according to a news release from JLL.

A third (31%) of total investment volume were from Chinese buyers, JLL added. 

Amongst commercial real estate investment, capital values of Grade-A office segment posted the strongest growth among sectors after registering a 17.5% increase this year thanks to strong government land sales like the Murray Road Carpark sold last May.

JLL expects a 5-10% increase in prime office capital values next year. 

The retail segment continued its steep decline as capital values of high street shops decreased 11.1% this year and prime shopping centres dipped 0.5% as slumping tourism numbers continue to negatively affect the submarket. 

However, JLL forecasts a mild recovery for the segment as high street shops are expected to rise marginally by up to 5% over the next 12 months. 

“The limited supply of Grade A office assets available for sale may hinder investment volumes in 2018. Notwithstanding, we believe that there is still sufficient demand for capital values to rise a further 10%. Investor interest in retail properties is also likely to gather momentum but attention is likely to be focused on neighborhood assets rather than high street shops,” said JLL Head of Capital Markets Joseph Tsang.

Photo from Diego Delso, CC BY-SA 3.0