Annual investment volumes in retail real estate could hit $180 billion globally by 2020 due to increasing cross-border activity, showing growth of around 50% on the projected volumes for 2012, according to Jones Lang LaSalle, which unveiled its projections in new global retail real estate report released at ICSC 2012 Retail Real Estate World Summit.
Retail's overall contribution to real estate investment is expected to sit at close to 30% over the remainder of this decade, an increase from the 24% last decade.
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Growth markets are projected to account for around one-quarter of global retail investment by 2020, compared to less than 10% today. By contrast, established markets will decline from 83% to just above 60%. China and India top Jones Lang LaSalle.
"The number of investable geographies has expanded globally as growth markets like China, Brazil and Turkey are attracting global investors," said Arthur de Haast, head of international capital group for Jones Lang LaSalle. "Together with an improvement in the quality and availability of retail assets, rising liquidity levels and further progress in real estate transparency, the retail investment sales sector is set for further rapid globalisation."
"Many of these growing retail real estate investment opportunities also are being supported by an increasing number of countries adopting real estate investment trust (REIT) investment vehicles," said Michael Niemira, ICSC vice president of research and chief economist. "The REIT, which provides transparency and ease of investment, has grown dramatically over the last 40 years with 27 countries already offering such financial regimes and currently another seven -China, India, Indonesia, Nigeria, Kenya, Vietnam and South Africa - considering future adoption. The ease of access to cross-border and domestic capital and strong consumer fundamentals should provide a solid platform for the growing global retail real estate markets over the next decade."
According to the report, more than $1 trillion of retail real estate has been traded around the world in the last decade. Global direct investment has averaged more than $100bn per year since 2004 and in 2011 annual volumes hit $122.5bn. In 2011 cross-border activity accounted for nearly half of all retail investment, whilst levels accounted for only one-quarter of all trade in 2004. Cross-border activity will continue to track at around half of all retail investment, boosting annual investment volumes to $160-180bn by 2020, representing a 30-50% increase on 2011 levels.
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