Jones Lang LaSalle's latest global real estate capital report - "Record Volumes, Record Globalisation", recorded global direct real estate investment of US$290 billion in the first half of 2006, up 30% on the same period in 2005. Of this total, Asia Pacific accounted for approximately 15% at US$43 billion, which is a 40% increase over the same period in 2005.

Guy Hollis, International Director in Jones Lang LaSalle's International Capital Group says, "Real estate markets are continuing their strong evolution into a global asset class, with cross border investment now representing 44% of total volumes, compared to 34% for the first half of last year. The real proof of this globalisation is that inter-regional investment, meaning transactions involving either purchaser or vendor from outside the region where the asset is located, now represent 31% of total volume (US$89 billion), up from 24% a year ago. In relative terms, the globalisation of real estate investment has had the greatest impact on developing markets. In Central Europe and some Asian and Latin American markets, inter-regional investors are purchasing the majority of available prime quality stock."

"Across the world, fund managers are receiving record fund inflows as populations in developed countries approach retirement age. Many of these funds are attracted by real estate's strong stable returns and we are witnessing a significant re-weighting of investment portfolios in favour of real estate assets. With this in mind, we believe that 2006 is on target to be another record year for commercial direct real estate investment as we expect total transactions to reach US$600 billion this year," adds Mr Hollis.

Offices account for 48% of total inter-regional purchases (down from 52% in first half 2005) with US$33 billion invested in the sector. Hotel investments have increased significantly to US$16 billion (23% of inter-regional purchases, up from 20% in 2005); very large portfolios in the USA and across Europe have been purchased by inter-regional investors.

Global Direct Real Estate Investment Reached a Record US$290 billion in First Half of 2006 Add One

According to the report, cross border investment in Asia Pacific represented 29% of the total investment in the region (up from 28% in H1 2005) and inter-regional investment reached 18% of total investment (up from 15% in H1 2005). Japan accounts for 51% of total Asia Pacific transaction activity, with a further 40% taking place in four major markets: Australia (12%), China (11%), Hong Kong (10%) and Singapore (7%).

Mr Hollis notes, "As forecast in our 2005 report, Japan and China were the stand-out performers in Asia Pacific. Japan had a particularly impressive half year with transaction activity almost reaching full-year 2005 levels. Both local and cross-border investors have returned strongly to the market, buoyed by sustained economic growth, low interest rates and an end to property price deflation. As for China, transactions were double those recorded in H1 2005."

Asia Pacific cross-border activity rose strongly to US$13 billion, increasing in all major markets with the exception of Australia where scarce product and strong local demand are crowding out foreign players. Cross border investors are now involved in over 25% of transactions (by value) in all Asia Pacific markets with the exception of Australia (11%) and Japan (19%). Major cross-border purchasers included "Global sources of funds", US, Singaporean and Australian investors. Japanese investors who sold large volumes of Australian real estate in 2005 have re-emerged in the first half of 2006 investing in offices in China, while Australian investors were active in Europe and the US, buying up office, retail and industrial real estate. While Global and US investors were the major inter-regional purchasers in Asia Pacific, Middle Eastern investors are beginning to show interest in the region.

Americas - Direct commercial real estate investment in the Americas was US$129 billion in the first half of 2006, up 27% on first half 2005. Cross-border investment represented 27% of total investment (up from 16% on H1 2005) and inter-regional investment jumped to 26% of total investment (up from 15% in H1 2005) as unlisted funds and global asset managers made significant purchases. The USA represents 96% of the region's transactions by value; other investment markets include Canada and the rapidly growing cross-border markets of Mexico and Brazil.

Global Direct Real Estate Investment Reached Record US$290 billion in First Half of 2006 - Add Two

US and Canadian real estate ownership is becoming increasingly global, with cross-border investment totaling US$35 billion in the first half of 2006. Globally sourced funds have replaced German investors as the largest source of cross-border capital in both markets. These "Global's funds were huge players in the Americas markets, purchasing over US$ 9.5bn of hotel portfolios, in addition to sizeable office and industrial investments. Middle Eastern Investors have continued their strong re-emergence in the US markets

Europe - Direct commercial real estate investment in Europe was US$117 billion in the first half of 2006, up 30% on the same period in 2005. Cross-border investment represented 68% of total investment (up from 57% in H1 2005) and inter-regional investment reached 39% of total investment (up from 38% in H1 2005). Three markets hosted 70% of European activity: the UK (35% of total European transactions), Germany (20%) and France (15%).

As forecast by Jones Lang LaSalle in 2005, Germany had a particularly impressive first half, with transaction activity almost reaching the levels attained in full-year 2005. Transaction activity was also more than double first half 2005 levels in France, Finland, Ireland and Russia. The UK also had another strong half, particularly in London.