[Asia Economy Reporter Park So-yeon] Last year, the scale of global commercial real estate investment significantly decreased due to the impact of COVID-19. While investments declined in most regions such as North America and Europe, investments in Korean commercial real estate were analyzed to have rather increased.
According to the Global Real Estate Team at Daishin Securities on the 1st, the global commercial real estate investment market size in 2020 recorded $801 billion, showing a 26% decrease compared to the previous year.
Daishin Securities recently analyzed that over the past five years, the proportion of cross-border transactions in the global real estate market has maintained a level above 25%, indicating relatively solid performance.
It is interpreted that the downturn in the market was due more to environmental factors such as restricted cross-border movement caused by COVID-19 rather than a reduction in investment demand or capital.
By region, the Americas showed the largest decline (-34%). The United States, which accounted for the largest single-country share in the global investment market, saw a significant decrease in transaction volume (-31.6%).
Europe, centered on Germany and the United Kingdom (-15%), and the Asia region, centered on Korea and Japan (-21%), recorded relatively solid performance.
In 2020, while most major global countries recorded negative (-) results compared to the previous year due to the impact of COVID-19, Korea was the only country to grow (+16.2%), proving strong domestic demand, according to the securities firm.
Looking at quarterly performance in 2020, the fourth quarter saw a sharp increase (+84%) compared to the previous quarter. The global commercial real estate market sharply declined (-53%) in the second quarter after COVID-19 but then experienced positive (+) growth for two consecutive quarters.
In particular, the large increase in the fourth quarter suggests that the transaction market has entered a gradual recovery phase. The Global Real Estate Team at Daishin Securities stated, "In the second half of 2021, when COVID-19 vaccines become widespread, the real estate transaction market will also regain its usual vitality."
Global integrated real estate services company CBRE also forecasted that the global commercial real estate market would grow by about 15-20% in 2021 compared to the previous year. However, there is an interpretation that the asset price aspect has not yet stabilized. The global office real estate yields compiled by CBRE continued to rise but showed some slowdown in growth in the fourth quarter of 2020. Daishin Securities judged that there is still potential for further increases in global office real estate yields. They also expected further increases in the retail yields, which have been continuously rising.
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