Asia Pacific markets will continue to drive global growth in property markets this year, however, a deceleration is becoming increasingly apparent, according to the latest quarterly report from Jones Lang LaSalle. Following a lull in activity in the first quarter of 2012 the global commercial property market has resumed a steady recovery path, the report suggests.

Investment volumes recovered to US$108 billion in the second quarter of the year, up 24% quarter on quarter so that capital markets are on track to achieve US$400 billion volumes by the end of the year. However, as eurozone economic problems persist creating a climate of uncertainty, corporate occupiers have adopted a ‘wait and see’ approach to expansion as global take up volumes have fallen year on year. Corporates are trending towards sale and lease back transactions as they look to release capital, the report says.

Leasing activities have improved from the lull in the first quarter of 2012 but is still below 2011 levels due to weak jobs growth, slow corporate hiring and the downward reset of global growth projections. Gross leasing volumes for full year 2012 are expected to be 10% lower than in 2011.

On the other hand, vacancy continues to edge downwards, with the global office vacancy rate falling to 13.3% in the second quarter, the lowest since 2009. Regionally, the Americas and Asia Pacific regions have continued to see vacancy rates fall, while they have remained unchanged in Europe.

With global office supply still falling, the Jones Lang LaSalle Global Office Index, which tracks the rental performance of prime office space across 90 major markets, has continued to grow, up by a further 0.6% in the second quarter of 2012. In the residential sector high trading volumes have been recorded for Germany, while momentum has been maintained in the US rental apartment market. In Asia, residential sales have improved in China and Hong Kong and remain resilient in Jakarta, driven by investor interest, low lending rates and rising rental returns, the report says.

Retail markets have had mixed fortunes. The report says that while Greater China recorded strong demand and healthy rental growth, market conditions were relatively flat in the US. In Europe, demand is expected to drive rents in the top retail locations in London, Moscow and Paris in the second half of 2012, while most other European markets will remain broadly stable.

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