First quarter transaction volumes totalled $187 billion, representing a resilient but uneven stage within the broader investment recovery. The first quarter volumes were bolstered by stronger performance in more mature and liquid markets, including the U.S. UK, France and Japan. Throughout the first quarter, appetite for higher-quality core and core-plus products persisted. In tandem, demand increased for opportunistic plays in competitive segments of the market. Logistics and multifamily investments represented 63% of all opportunistic transactions in the first quarter (up from 44% in Q1 2020). Less risky assets remain key drivers of transaction activity in the office and retail sectors, with the core share of deal flow in the sectors climbing to levels not seen since 2015. An accelerated focus on portfolio diversification was noticeably observed in the multifamily sector, led by the U.S. and Europe. Multifamily investment saw an increase of 66% in Europe, led by the UK, Germany and France. In Asia Pacific, Japan was the most liquid market (at $11.5bn) by a wide margin in Q1, partially attributed to the persistent appetite for multifamily assets in Tokyo, Osaka and Nagoya.
Throughout the quarter, markets historically concentrated with office and retail investments experienced gains in investor confidence. During 2021, investors demonstrated increased confidence for select markets in Asia, such as Singapore and Hong Kong, where cultural norms and the structure of housing in the markets limit widespread work-from-home policies. Cross-border capital flows remained fairly muted throughout the quarter, offset by markets with deep domestic access to capital. Global investors with ample dry powder and an established on-the-ground presence continue to play a critical role in the cross-border market, deploying $17.5bn in the first quarter. One year into the pandemic, operators and investors have a greater understanding of cash flow stability and subsequent operational performance.