Worldwide investments in office buildings soar in 2006

Investments in office buildings, with markets in Asia and Europe experiencing the most significant growth, continued to surge in 2006, according to a report released by global property consultant CB Richard Ellis Group Inc. (CBRE).

Investments across borders also increased, as competition among investors, yield compression, and a limited pool of desirable assets led investors to broaden their geographic search for opportunities, the report added.

At end-2006, six out of 12 major global markets posted more than 30 percent year-on-year increases in office investment volume.

In Asia, Beijing recorded $3.7 billion in volume, well above the prior year’s $2.1 billion. Shanghai posted significant volume totaling while $2.8 billion in 2006.

Singapore generated $2.7 billion in investment sales, more than twice the $1.2 billion registered in 2005.

In the major European markets, London was the most liquid property market with a 2006 investment volume of $27.6 billion, while Paris had $21.2 billion nearly doubled its previous year’s $11.4 billion total.

In the United States, the New York investment market showed no signs of cooling, as more than $23.3 billion of office properties traded in 2006, up 31 percent from the previous year’s $17.7 billion.

Concurrent with the increased investment volume was a substantial rise in cross-border investment activity.

In Asia, the Shanghai market led the way, attracting nearly $803 million, more than twice the $376 million recorded in 2005. American investors were responsible for $313 million of Shanghai’s investment sales total, up from $251 million a year earlier.

In Hong Kong , the top foreign investors were Australian buyers, who acquired over $643 million in assets during the past year.

Middle Easterners were the biggest foreign investors in the US, with over $5 billion in acquisitions. In 2005, Australians were the largest foreign investors in the US, purchasing over $8.5 billion in real estate, and adding another $3.7 billion in investments in 2006.

Foreign investment in Canada reached $3.5 billion, surpassing its 2004 peak of $2.4 billion.

CBRE’s Investment Properties Group president Gregory S. Vorwaller said the increasing volume of global office investment activity over the past five years reflects the abundant institutional and private investor capital that has been allocated to real estate and the migration of this capital across borders in pursuit of opportunity.

“Diversification across both geography and property types will continue to drive investment portfolio decisions around the world,” Vorwaller added.

CBRE reports on global investment values worldwide, cross-continental investment, and trends in yields and capitalization rates. The report also cited that since 2002, 10 out of the 12 major global markets experienced a 100 percent increase in office investment volume.

CBRE, a Fortune 1000 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm. It serves real estate owners, investors and occupiers through more than 350 offices (including affiliate and partner offices) worldwide.

CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; investment management; appraisal and valuation; and research and consulting.