Cross-border real estate transactions plummeted in the first half of the year, with most buyers investing on their home turf, according to the results of a Jones Lang LaSalle's cross-border study.
Buyers investing outside their home countries spent $2.4 billion in the first half of 2009 vs. $15.1 billion for the first half of 2008. Purchases in Brazil were $70 million, down from $1.3 billion, while Canadian purchases were $500 million, down from $1.3 billion, and U.S. purchases came in at $1.8 billion, down from $10.7 billion. There were no cross-border purchases in Mexico.
Total global real estate investment transactions, including cross-border purchases, fell to $76 billion in the first half of 2009, down 68% from $239 billion in the first half of 2008. Total transactions in North America and South America were $17 billion vs. $75 billion in the first half of 2008; European deals, $32 billion vs. $108 billion; and Asia-Pacific transactions, $28 billion vs. $56 billion.
In the first half of 2009, Japan was the most active region, with $15 billion in transactions, displacing the U.S. and the U.K., which had been the most active investor regions. The U.S. was second with $14 billion in transactions; the United Kingdom saw $11 billion in deals.
The only region to see a transaction increase was Asia, where the market adjusted more quickly and pricing may have bottomed in some Asian cities in the second quarter, according to a separate real estate analysis released this summer by CB Richard Ellis. For example, in the first half of the year, there were more commercial real estate transactions in China ($31.2 billion) than in the U.S. ($16.2 billion) and the U.K. ($13.7 billion), according to Real Capital Analytics.
In the first six months of 2008, “deals were still getting done,” said Steve Collins, managing director, international capital group, who works in the Washington office of Chicago-based Jones Lang LaSalle.
Some transactions in the U.S. stemmed from private equity firms buying real estate debt as a way of forcing a sale of the property secured by the debt, Mr. Collins said, a process that's hard to track.