North and South America best-performing prime global office market in first quarter of 2012: CBRE
The North American and South American prime office markets proved the most enticing to global commercial property investors in the first three months of 2012, according to research by CBRE.
Prime office capital values in the Americas rose by 9.6% over the March quarter of 2012 compared with the March quarter of 2011.
This was actually lower than the 9.9% gain achieved by the Americas in the first quarter of 2011, but the region benefited from prime office returns decreasing in competing regions.
Notably for Australian commercial investors and landlords, Asia-Pacific capital values grew by 8%, making it the second most attractive region for investors – but less than half the 19% capital growth achieved in the first quarter of 2011.
CBRE says the Asia-Pacific office market softened during the first quarter of 2012 due to global financial market concerns as well as slower domestic economic growth.
The Europe, Middle East and Africa (EMEA) region was the poorest performing, with just a 0.7% gain in capital values.
CBRE global chief economist Dr. Raymond Torto says there has been a “marked increase in investor interest in the Americas’ prime properties over the last year” reflected in the latest index.
“Last year at this time the Americas was showing respectable gains, but were far behind the 19% annual performance witnessed by the Asia-Pacific capital Value Index.”
CBRE Global Office Capital Value Indices Annual Growth Rates | ||
| Q1 2011 | Q1 2012 |
Global | 12.2% | 5.7% |
Americas | 9.9% | 9.6% |
Asia Pacific | 19.0% | 8.0% |
EMEA | 7.6% | 0.7% |
Over the last year the Global Capital Value Index rose 5.7% while the Global Rent Index rose 3.4%.
According to CBRE, investors remain risk adverse and highly selective and are most willing to divert capital to high-quality, prime assets.
The report notes that while office capital values have been recovering for several years now, only the Asia Pacific Office Capital Value Index has surpassed its pre-recession peak and stands at 208.5.
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The Global Office Rent index remains 10.2% below its pre-recession peak value of 20 and the improvement over the past year has been modest, with a 3.4% growth rate.