Real estate investment rebounds to pre-pandemic levels

Investor confidence gets a boost from vaccine rollouts and economic recovery

August 09, 2021

Global real estate investment has vaulted to pre-pandemic levels as vaccine rollouts and signs of economic recovery lure investors back into the market.

Around US$247 billion was invested in global real estate during the second quarter of this year, more than double the amount invested a year ago, when the COVID-19 pandemic heavily impacted deal making, according to JLL. Crucially, investment activity is now level with the same period in 2019.

The rebound is due in part to pent-up demand and robust pipelines, alongside expanding access to vaccines in many of the largest commercial real estate markets, particularly in the U.S., Germany, the U.K. and China.

“Rather than structural issues in financial markets, the economic downturn has been due to public health, and that’s meant liquidity can rebuild quickly,” says Sean Coghlan, global director of capital markets research and strategy at JLL. “With ample dry powder in the market, there’s a desire among investors to expand and diversify portfolios.”

While deal volumes returned in force, there are some marked differences to pre-pandemic activity. For instance, investors have been staying closer to home, with travel restrictions dampening cross-border deals.

Through the first half of 2021, cross-border investment of US$106 billion was 29 percent of total volumes, the lowest share since 2014, according to JLL’s Global Real Estate Perspective.

But overall confidence in real estate as an asset class is pushing investors further out on the risk spectrum, a pre-pandemic trend that is reemerging. Among investors, competition is increasing.


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“There are more prospective buyers than on-market opportunities, creating more intense bidding processes,” Coghlan says. “Greater competition and the deep pools of capital targeting real estate are combining to drive up pricing – while at the same time bringing what have been lagging areas of the market back into focus.”

There’s also a rising appetite for scale, as seen in increasing portfolio investment and M&A activity.

“It’s a unique, defining characteristic of the current recovery,” he says. “In recent quarters, markets that offer investors the ability to deploy capital at scale and efficiently have experienced remarkable resilience, with capital flows recovering. Scale is expected to remain an investment theme.”

While activity broadly rose across markets and sectors, the U.S. saw a particularly strong quarter, with volumes surging 161 percent to US$112 billion, JLL data shows. 

Deals have come from a range of sources. Boston Properties recently teamed up with the Canada Pension Plan Investment Board and Singapore’s sovereign wealth fund GIC in a US$1 billion co-investment program targeting office properties in Washington D.C., Boston, Los Angeles, New York, San Francisco and Seattle.

In Europe, volumes climbed by 74 percent year-on-year, helped mainly by the popularity of the German and U.K. markets. 

In the Asia Pacific region, investment was up 90 percent, with China and Australia dominating. AMP Capital fund recently sold its half stake in a Sydney office tower to M&G Real Estate Asia for A$575 million (US$422 million).

The ability of COVID-19 variants to spread rapidly underscores the unpredictability of the recovery. But overall, the strong quarter should reassure market participants, Coghlan says.

“Sentiment is improving off the back of increasing vaccination rates, while office re-entry strategies are also helping,” says Coghlan. “The global investment market has shifted from resilience to recovery.”

Contact Sean Coghlan

Global director, capital markets research and strategy

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