Bangkok--15 Feb--CB Richard Ellis
Asian real estate investment markets posted a strong recovery in the second half of 2009 after witnessing a difficult start to the year. Investment turnover bottomed out in the first quarter but improved thereafter as investor confidence gradually returned, underpinned by the strong rebound in the equity markets, the persistence of low financing costs and a stabilizing trend in price levels across key markets. Direct real estate investment in Asia jumped 56% y-o-y in the second half of 2009 to an estimated US$25 billion[1]. However, overall transaction volume was still 22% lower in 2009 as compared with the previous year, according to CB Richard Ellis’ Asia Investment MarketView report for the second half of 2009.
Property markets in Greater China were at the forefront of the recovery with China, Hong Kong and Taiwan accounting for 57% of the total investment volume in Asia in the second half of 2009. The US$15 billion worth of transactions completed in Greater China during the review period was 169% higher than the amount recorded in the corresponding period in 2008. Japan, Singapore and Korea also witnessed a strong rebound in investment activity in the second half of 2009, accounting for 17%, 9% and 8% of the total volume respectively.
Investment activity was largely driven by domestic and intra-regional investors, which accounted for 83% and 15% of total volume respectively. The largest transaction concluded during the second half of 2009 was the disposal by daVinci Holdings’ debtors of Pacific Century Place Marunouchi in Tokyo for approximately JPY 140 billion (US$1.51 billion) to a local investor. Prime office properties continued to attract the most interest, accounting for over US$10 billion of investment in the second half of 2009, 41% of the total volume recorded. Prime office properties accounted for eight of the ten largest transactions witnessed during the period.
Residential properties accounted for 20% of total transaction volume, with the retail sector comprising 16%. Despite the relatively low transaction volume in the hospitality sector, a total of seven hotel transactions worth a combined total of US$380 million were concluded during the second half of 2009, surpassing the US$270 million recorded in the first half of the year. Transactions involving industrial properties also rebounded strongly in the second half of 2009, climbing 155% compared to the first six months, and accounting for a combined total of US$1.8 billion.
“Local buyers and domestic real estate funds dominated transaction activity in the second half but the period also saw a small number of core international institutional investors return to the Asian property market,” said Mr. Andrew Ness, Executive Director of CBRE Research Asia. “Investment volume and prices across most sectors, particularly in the residential and office markets, have increased considerably. However, there are concerns that a number of residential markets appear to be in the early stages of transitioning from a state of recovery to a situation where they are in danger of overheating due to the high liquidity and a surge of capital inflows to the region.”
The significant liquidity brought about by the monetary easing policies implemented by Asian governments since the onset of the financial downturn has led to concern over the sustainability of the current recovery. Looking ahead, Asian governments can be expected to gradually adjust their monetary policies and impose certain policy measures to tighten property lending as they look to prevent the formation of a new asset bubbles. Nevertheless, core international institutional investors are expected to gradually return to Asian real estate markets in 2010. The most challenging circumstance that they will face will be the limited availability of stock and deal flow as property owners remain generally reluctant to reduce their asking prices in the light of the ongoing market recovery.
Notes to Editors
1. Asia property investment sales volume/value is based on surveys carried out by CBRE Research Asia on major notable property transactions in major Asian cities.
2. CBRE Research Asia has adopted relevant measurements and definitions in calculating real estate investment capital flow figures in Asia (i.e. we only track publicly announced deals above a minimum threshold which are converted to US dollars using exchange rates recorded during each survey period.)
3. Investment volume excludes development site transactions
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company for three years in a row.
CB Richard Ellis established an office in Bangkok in 1988, followed by Phuket office in 2004, and Samui office in 2007. CB Richard Ellis (Thailand) Co., Ltd. has grown to be a leading real estate services provider, offering strategic advice and execution for sales and leasing for all types of property, property and facilities management, valuation and advisory, and research and consulting. For more information, visit the company's website at www.cbre.co.th.
[1] Preliminary data excluding land transactions, subject to final revision
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