Zacks_Analysts' Blog : Asia Transaction Volumes Rise: JLL - Analyst Blog

According to a report published by Jones Lang LaSalle Incorporated (JLL), a leading real estate investment trust (REIT), direct commercial property transaction volume in the Asia-Pacific region increased 14% sequentially to $18.2 billion in the third quarter 2010 with strong performance in Singapore, Australia and China. The report further anticipates the transaction volume tally to grow 15% in 2011 to about $88 billion.

The report cited that Singapore had recorded a 358% rise in transaction volume and stood as the third-biggest market behind Japan and Australia in the Asia-Pacific region, in terms of total investment volume. During the quarter, transaction volumes in central Hong Kong and Beijing surged 8.7% and 8.6% respectively with investors vying for premium assets.

Jones Lang had earlier predicted in its report that direct investment in global commercial real estate (CRE) prices will surge by 25% to 35% year over year to over $350 billion in 2011 – the highest levels ever recorded since 2008. The recovery is anticipated to be driven by growth in the Asia-Pacific region. During the first half of 2010, global CRE sales had totaled approximately $130 billion.

The report had revealed that office rentals in Asia were increasing gradually with net absorption or change in occupied office space in Tier I cities. Rents in Grade A office properties spiked 1.8% during third quarter 2010 compared to the year-ago period. The surge in office rentals came on the back of  rise in rents by 10.9% in Beijing’s central business district, 8.6% in Hong Kong and 5.1% in Shanghai.

Jones Lang provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. The company operates as a single-source provider of real estate solutions with a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets.

Jones Lang faces stiff competition from international, regional and local players in the market due to which it has to continually invest in value drivers that act as key differentiators. Consequently, the company is under severe stress to maintain its profitability. We maintain our ‘Neutral’ rating on Jones Lang, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ recommendation. However, we currently have an ‘Outperform’ rating and a Zacks #2 Rank (‘Buy’ recommendation) on NorthStar Realty Finance Corp. (NRF), one of the peers of Jones Lang.