Strong Capital Value Growth Seen in Q2 2011

August 25, 2011 / Elizabeth Buckley, Commercial Property Analyst

A strong capital value growth in Asia Pacific of 24.2 percent year over year has lifted a global increase of 15.2 percent year on year during the second quarter of 2011, according to the CBRE Global Capital Value Index.

Strong Capital Value Growth Seen in Q2 2011

“Investor preference gravitated toward prime markets and core assets during the second quarter, fueling value growth in the CBRE Office Value Index,” said Raymond Torto, CBRE’s Global Chief Economist.

“In contrast, secondary and tertiary market capital value growth globally remains subdued. While this strong showing in commercial real estate coincided with economic headwinds in the first half, the increased uncertainty in the global economy makes it unlikely that the performance of the first half of 2011 will continue for the second half.”

The Index was released following a CB Richard Ellis Special Report, The Outlook for Latin America’s Commercial Real Estate Markets, showing that Latin America has emerged as an important destination for both investors and corporate occupiers as commercial real estate conditions are strong in most of the region’s major markets.

The CBRE Global Capital Value Index, which will be published in the CBRE’s latest Global Capital MarketView, shows that commercial real estate capital markets were active and gradually improving during the second quarter of 2011 despite sustained economic “headwinds”.

The recovery in the Asia Pacific accordingly drove the upturn in capital value.

On the other hand, Australia emerged as a key destination for cross-border investment flows in Asia Pacific due to not only high yields, but also as a result of the Japan earthquake which muted transaction activity in the region and transferred investor interest to Australia.

The CBRE Americas Capital Value Index witnessed its largest gain of 12.7 percent year over year during Q2 2011 and the America’s index was the last global region to emerge into positive value growth following the financial crisis.

While the CBRE EMEA Capital Value index turned positive one quarter earlier than the U.S., it decelerated in Q2 2011, gaining only 8.6 percent year over year, down from a 11.3 percent year over year gain in Q1 2011.

Growth in EMEA has been affected by the European Sovereign Debt crisis, CBRE noted.

The CBRE Global Capital Value Index was created by CB Richard Ellis Research and is comprised of data from 123 cities around the world. The base period for the index is Q1 2001.

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