The main markets around the world have so far fared relatively well through this period of instability seen since the beginning of 2016. Despite rising concerns, investment volumes should remain high in 2016, while rental market fundamentals and corporate demand remain robust in the United States and Europe. At this stage, the main areas of concern are the consequences of Brexit as well as the slowdown in the Chinese economy.
At the end of H1 2016, the investment market posted a volume of $292 billion (€263 bn), representing a 10% decrease compared with 2015. Due to the rise in political uncertainty and greater investor prudence, the investment market could see a 10 to 15% decrease in activity in 2016. However, even with a reduction to around $600 billion (€540 bn), this is one of the highest ever levels. In Europe, investment volume at the half-year point reached $109 billion (€98 bn) and is only 5% down on 2015; this is due to sustained activity in continental Europe which has virtually offset the reduction in activity seen in Great Britain. Yields continued to fall in some markets but the overall trend is stabilisation.
As corporates are adopting a more prudent stance, the position for rental markets is more mixed. Activity is holding well in the United States, most European countries and in Japan; of the main markets, only Great Britain and China have seen reductions in activity. Given the context of uncertainty, the rental market could see a slight reduction of around 5% in 2016 compared with the 2015 record of 41 million sq m. Supply has continued to fall and reached 12.1% at the half-year. Levels are not expected to change considerably by the end of the year, with Europe and the United States posting a fall while Asia could see a slight increase in vacancy rates. Because of tightening levels of supply, rents are on an upward trend with a 5% year-on-year increase. However, the rate of increase should slow to 3% towards the end of the year.
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