Real estate is becoming a major hotbed of mergers and acquisitions especially for the upcoming year.
It may come as a big surprise for people in the properties business but real estate figures to be the next big stage for mergers and acquisitions (M&A) in the next 12 months after 2015 ends. According to Forbes, there was a recorded 57 percent increase in the due diligence activity in real estate for the first half of this year which was reported by Intralinks' Deal Flow Predictor. It gives a six-month forecast for M&A and the spike is said to be the biggest leap for any industry. There was also an indication that real estate deals were doing good right into the end of the third quarter.
In the same report by Forbes, a big part of why this is a surprise is because investors were expecting interest rates to rise. Many thought that this increase will eventually halt major activities for the financing-dependent industry. However, if current trends are to be the benchmark, real estate M&A is not showing any signs of slowing down. In North America alone, announced deals increased by 37 percent in the first half compared to last year in the same period while the deal value of these transactions also increased by 94 percent.
These trends show promise; commercial and residential property prices have recovered which should excite everyone in the sector. Meanwhile, with the economy bouncing back, rents figure to become higher and occupancy rates will likely maintain a strong and steady rate.
In a report by Pensions and Investments, real estate mergers and acquisitions around the world accounted for 9.8 percent of the $2.2 trillion recorded until June of 2015. Thomson Reuters reported that this is higher than last year's 8.9 percent of $1.8 trillion in the same amount of time.
