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China leads BRICs transactions
Overall real estate transactions volumes in BRICs have held up well during the 2008-2009 global downturn in investment activity. In fact the BRICs markets actually recorded a rise in transactions, up by 10 percent between 2007 and 2009, all the more impressive when set against a fall in global volumes of over 70 percent. The BRIC’s contribution to global transactions has doubled each year from 2 percent in 2007, to 4 percent in 2008 and to 8 percent in 2009. The fact that this is still a relatively low proportion of global activity is explained by lower real estate transparency, and specifically in India and China, continued constraints on foreign investment.
China has accounted for most of the growth in transactions in the BRIC’s. Here, the investment market has picked up strongly since H2 2009, and based on Jones Lang LaSalle’s figures, China is placed sixth globally in a ranking of investment volumes, just behind Germany and France. Much of the activity has been in land sales however, and according to RCA (whose figures include land sales), China is now the world’s most active investment market.
The potential of the BRIC economies as a source of capital for cross-border real estate investment is high, although it is early days yet as BRIC investors still have substantial opportunities in their domestic markets. Currently they are still minor players, accounting for less than 3 percent of cross border activity in 2009. The largest BRIC investor to date is the China Investment Corporation (CIC), the Chinese sovereign wealth fund, which has placed sizeable funds into Blackrock, the Goodman Group and reportedly into Morgan Stanley’s latest Global Real Estate Fund, MSREFVII. |
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