The global property market is edging towards recovery, according to Jones Lang LaSalle.

JLL’s latest report showed that after a dip in activity in the first quarter of 2012, investment volumes climbed back up to $108 billion in the second quarter – placing capital markets back on track to achieve a volume of approximately $400 billion by the end of the year.

Global economic outlook weakened as euro strains re-emerged, while low growth in developed economies remains a drag on a strong real estate recovery. Corporate occupiers adopted a wait and see approach to expansion, with sale and leaseback activity increasing as corporate looked to release capital.

Leasing activity improved from the first quarter dip, but remains lower than 2011 due to weak jobs growth. As a result, gross leasing volumes across 2012 are expected to be 10 per cent below 2011.

Global office vacancy rates are now 13.3 per cent, the lowest since 2009, while vacancy continues to edge downwards.

The weight of capital continues to compress prime yields in some markets, while as the yield gap widens, more investors are expected to look at secondary markets. Nonetheless, debt will be a constraint, especially in Europe.

In retail sectors, JLL highlights a low development pipeline in both Europe and the US, but retail sales underpin activity in Asia as industrial recovery builds in the US market. Hotels saw a shortfall in investment during the first half of the year, but a strong deals pipeline is predicted to make up for the investment levels in the coming months.

Both sentiment and levels of activity across the world’s major real estate markets have seesawed during the first half of the year. Following a slow start to 2012, the second quarter saw a modest rebound in investment and leasing turnover. But, economic uncertainty continues to affect investor sentiment. Deals are taking longer to close and the market remains polarised as investors steer clear of risky assets, focusing instead on prime product in core markets like London, Paris and New York. Yet, in spite of economic uncertainties, real estate as an asset class continues to attract a substantial weight of capital and remains firmly on track for this year’s global investment volumes to match the robust levels of 2011.

In the corporate occupier markets, leasing volumes are also up on the subdued levels of the first quarter, but activity is still running 10%-15% lower than in 2011. Expansion demand is relatively weak as corporate occupiers look for further cost savings and smart growth ‘in situ’. Where there is new demand it is typically focused on higher-potential ‘emerging’ markets like Mexico City and Jakarta, which are showing healthy levels of corporate activity, or on speciality markets such as the tech-rich areas of San Francisco Bay and the energy and commodities-driven cities like Houston and Perth