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News Release

Chicago, London

Record-Level Real Estate Investment Contributes to Economic Growth

Research by JLL shows that as real estate investment reaches pre-recession levels, 50 percent continues to be concentrated in 30 cities worldwide

Chicago, London, 21 January, 2015 – An analysis of the top cities for real estate investment continues to demonstrate the contribution of real estate to the success of established and emerging cities across the globe. According to research by JLL (NYSE:JLL), total direct real estate investment is expected to have reached US$700 billion in 2014, matching the pre-recession levels of 2006, and is projected to increase a further 5-10 percent in 2015 driven by a robust economic environment.

As business and political leaders convene to discuss global issues at the World Economic Forum annual meeting in Davos, Switzerland, there is a greater appreciation for the importance of real estate in the global context.  A look at the 30 cities worldwide where 50 percent of the US$5 trillion in direct commercial real estate investments has been concentrated over the past decade highlights the impact of real estate investment and investor confidence on the strength of super cities and the growth of second-tier cities. This is particularly evident in the four super cities – London, New York, Paris and Tokyo -- where one of every five dollars of commercial real estate transactions took place, representing 19 percent of total global volumes.


According to Colin Dyer, CEO of JLL: "As real estate investment reaches the levels last seen before the Great Financial Crisis, we are optimistic about the positive impact of these investments on cities, in part, due to the improved underwriting practices that have been put in place in the last few years.  We expect investments to continue to grow because the market is on a sounder footing than it was before the recession and has more robust controls and scrutiny on investments."

Direct real estate investment is expected to continue increasing to approximately US$1 trillion by 2020 driven by:

  • Improved controls including reduced reliance on leverage, greater use of equity, stricter under-writing standards and increased scrutiny by investment committees
  • The emergence of new sources of capital, primarily in Asia and other emerging economies
  • Increased allocation to direct real estate from institutional investors in developed markets due to low interest rates and an evolving regulatory environment
  • Growing cross- border investments from South Korea, China, Taiwan and Malaysia spurred by government efforts to reduce domestic overexposure by moving capital offshore

Recent research from JLL identifies the continued importance of the four global super cities while second-tier tech rich cities in Europe and the United States grow and attract investors. (+17 percent) and Japan (+4 percent) up on 2013 but China 20 percent lower, despite the strong final quarter.


  • The dominance of the super cities for total and cross-border investment in 2014 was driven partly by single asset mega-deals – such as the Gherkin and HSBC office towers in London, Pacific Century Place office tower in Tokyo, the Waldorf Astoria hotel in New York and the Marriott Champs Elysees hotel in Paris.  Interestingly, two of these deals were secured by high-net-worth-individuals, an emerging class of investors who are able to challenge and beat institutions for trophy assets in the main global cities.
  • The underlying shift in investor activity toward second-tier cities also continued.  This is most apparent in Europe where, for example, the number of transactions in London and Paris fell by 17 percent year over year, but increased by 37 percent in the next 20 largest investment destinations.
  • In Northern Europe, mid-sized cities – notably Dusseldorf, Hamburg and Munich (Germany), Amsterdam (Netherlands), and the Nordic capitals of Oslo and Copenhagen – experienced high levels of investment volumes as a proportion of city GDP. These transparent and stable real estate markets with strong technology and environmental credentials are attractive to corporate tenants and investors.
  • In Europe, investment volume growth also extended to cities such as Dublin and Madrid, which were considered almost un-investible just a few years ago.  Dublin jumped to 24 in the global investment hierarchy from 93 in 2013 and has the world's fastest growth in office rents over the past year.
  • Moscow left the top 30 in terms of direct investments into real estate, by moving down to 41st position in 2014 from 12th and 22nd in 2012 and 2013 respectively. Investment activity on the Russian real estate market has been under pressure of economic and political situation since start of 2014, and especially of increased rouble volatility and low availability of debt financing in H2 2014.
  • In the U.S., transaction volumes shifted to the primary gateway cities of New York, Los Angeles, Chicago, San Francisco, Washington DC and Boston, reversing a trend toward secondary cities seen in 2012 and 2013.  Commercial real estate investment volumes in primary cities were up 66 percent year over year, compared with 37 percent for the U.S. market as a whole. 
  • Some U.S. secondary markets such as Philadelphia, Miami and Charlotte did experience increased interest from domestic institutional buyers.  Foreign buyers, on the other hand, are not as active in most secondary cities yet outside of trophy, core-plus deals.  Transaction volumes in secondary cities are expected to increase in 2015 driven by an increase in assets for sale.
  • Most pan-Asian investment was focused on the major cities of Tokyo, Sydney, Melbourne, Hong Kong, Singapore, Seoul, Shanghai and Beijing.  With a lack of volume growth across the region in 2014, there was less appetite for secondary city opportunities outside of trophy or core opportunities due to lower transparency and market accessibility.
  • Multi-family assets have been a focus of investor activity in the U.S. and interest in these properties has spread to countries such as the UK and Australia.  Additionally, Chinese residential developers have expanded aggressively into overseas markets in recent years, with a focus on London, New York, San Francisco, Toronto and Sydney.​