For anyone who is interested in investing in commercial properties,
two main options are available to you. You can either go for the direct
or indirect investment route. Direct commercial property investment is
where you buy the property outright and takes full responsibility for
its management. Indirect commercial property investment on the other, is
where you half own the property through a unit trust.

Both options have opportunities and can be rewarding
for the investor. However, each one of them has its own pros and cons.
For example, a direct property investment gives the investor the benefit
of full control and decision making. If there are any rewards, he or
she takes it all. He or she also bears all the risks of interest rates
and others.

On the other hand, indirect property investment is a
shared responsibility between the investor and the unit trust. The
risks are reduced and that goes for the rewards as well.

In
recent times, the global commercial property investment is on the rise.
More and more investors are making the direct investment their preferred
option. Global volumes in the second quarter of 2013 was valued at 100
billion dollars. This is expected to be 450 billion dollars by the end
of the year, a 11 per cent increase from previous data.

According to reports from Jones Lang LaSalle capital markets research,
this year is getting increases in volumes generally in the property
investment business. The direct investment has been on the rise since
2011, something that was predicted by Arthur de Haast, Lead Director,
International Capital Group at Jones Lang LaSalle.

This is what De Haast had to say:

“Over the past two to three years, we have predicted that more capital
would be allocated to direct investment in core property assets; this is
now materialising. Institutional, private equity and high net worth
individual investors are now consistently bidding on opportunities
around the world. In addition to this, investors are starting to
diversify their portfolios, both in terms of risk and geography, looking
for more value-added and secondary opportunities; a trend we expect to
continue over the short to medium term.”

So what could be the
reasoning behind this shift in commercial property investment? Could it
be that investors now want full control of their investments and benefit
from the rewards? Or could it be that the recent uncertainty in the
property market is contributing to this new trend?

David Green-Morgan, Global Capital Markets Research Director at Jones Lang LaSalle, sheds more light on the issue:

“The volatility we have seen in equity and bond markets over the last
quarter has further added to the attraction of commercial property as an
asset class. So far, the rising cost of global real estate debt has had
little effect on transaction volumes with most deals funded on modest
loan to value ratios. Unless there is a substantial rise in the cost of
debt, it is only likely to have a marginal impact on transactional
volumes for the remainder of 2013.”