Investors' appetite for trophy assets rises: JLL

Published July 5, 2007

Investors' appetite for trophy assets rises: JLL


INVESTMENT in billion-dollar 'trophy' real estate has accelerated in 2007, US-based property firm Jones Lang LaSalle (JLL) said yesterday.

So far this year, real estate investors have purchased 14 real estate assets worldwide for over US$1 billion each - the same number as for the whole of 2006, and almost five times the volume of US$1 billion-plus assets transacted in 2005. The recent sale of two major banking headquarters in London's docklands for over £pounds;1 billion each underscores investors' increasing appetite for large trophy assets, JLL said.

Of the 14 assets valued over US$1 billion each sold in the first half of 2007, seven buildings were traded in New York, five in London, one in Paris and one in San Francisco. In addition, a significant number of trophy assets in London, Frankfurt and major US cities have been traded just below the US$1 billion threshold as well, JLL said.

In 2006, by comparison, nine assets valued over US$1 billion each were traded in the US, three in Japan, one in the UK and one in Singapore. The entire Cape Town, South Africa, waterfront development (a contiguous block) was also traded for over US$1 billion.

'Investors continue to allocate significant funds to real estate investment and face intense competition for quality assets,' said Padraig Brown, associate director in JLL's international capital group. 'The ability to place a significant volume of funds in a single investment can be attractive to many investors - especially when rental growth for prime assets is forecast to outperform.'

A number of the trophy assets traded in the past 18 months came to the market in sale and leaseback transactions - becoming available to institutional investors for the first time.