Bangkok--11 May--CB Richard Ellis
The Asian real estate investment market remained buoyant during the first quarter as investor sentiment remained largely positive, and investors continued to demonstrate cautious optimism. The steady flow of small and medium sized transactions witnessed in the latter half of 2009 continued to feed through into the year’s opening three months. Given the relatively low level of trading activity at the beginning of 2009, in the first quarter total direct real estate investment in Asia jumped 215% on a year-over-year basis to an estimated US$16.5 billion, according to CB Richard Ellis’ Asia Investment MarketView report for Q1 2009.
Despite the strong growth in transactions, as measured on a yearly basis, transaction volume slipped in China, Hong Kong and Taiwan on a quarter-over-quarter basis. This dip in Greater China investment activity was attributable to the fact that investors began exhibiting a more cautious stance in response to the change in government policy settings with respect to the rapid run-up in prices in local real estate investment markets.
A drop in transaction volume in Taiwan was partially attributable to the limited availability of investment-grade properties for sale. The US$7.8 billion worth of transactions completed in Greater China during the first quarter was 19% lower than the amount recorded in the fourth quarter of 2009. However, elsewhere in Asia, Japan, Korea and Singapore witnessed a strong rebound in investment activity on a quarter-over-quarter basis, with the volume of investment transaction turnover in these markets rising by 45%, 32% and 24%, respectively.
Throughout Asian investment markets, transactional activity was largely driven by domestic investors, who accounted for 72% of total investment volume. However the US$12 billion worth of transactions completed by domestic investors was US$2.1 billion lower than the previous quarter, this shift, in turn, reflected the rising proportion of cross-border activity during the review period and the return of international real estate funds.
“The quarter saw both opportunistic and core international institutional investors return to the Asian real estate markets, attracted by the signs of a sustained recovery,” said Mr. Andrew Ness, Executive Director of CBRE Research Asia.
“At the same time, well-capitalised Asian REITs and sovereign wealth funds also resumed the portfolio expansion which they had halted during the most severe period of the global economic downturn, and their return was marked by rising level of acquisitions in Japan and Singapore.”
Prime office properties continued to attract the most interest during the first quarter, accounting for over US$5.8 billion of investment in the first quarter of 2010, 35% of the total volume recorded. Office properties accounted for seven of the ten largest transactions witnessed during the period.
Residential and retail properties continued to attract similar proportion of investment from investors, residential properties accounted for 13%, with the retail sector comprising 14% of the total investment volume. Despite the relatively high proportion of market share, the US$2.1 billion worth of residential transactions was 48% lower than the amount recorded in the fourth quarter in 2009. To a certain extent, this contributed to the tightening of monetary policy and other fiscal and bank regulatory measures which have recently been adopted by Asian governments seeking to cool down local residential markets.
The revival in Asia business and tourist travel was reflected in Q1 in the surge in activity in the hospitality sector, which exhibited a strong growth during the period under review with a total of seven hotel transactions worth a combined total of US$590 million having been concluded during the first quarter, this sum standing in contrast to the US$62 million and US$26 million recorded in the first quarter and fourth quarter of 2009, respectively.
Reflecting a revival of exports and continued expansion of industrial output within the region, the industrial property sector in Tokyo, Shanghai, Beijing and Hong Kong all began to see increased investment interest and the emergence of demand from both domestic and foreign investors, their interest underpinned by recent stabilisation of industrial asset prices. In the first quarter, transactions involving industrial properties rebounded strongly, climbing 21% on a quarter-over-quarter basis and accounted for a combined total of US$1.5 billion.
The continued recovery of the regional economy combined with low interest rate regimes continue to provide a favourable investment environment for real estate investors. Overall capital values are expected to stay on a steady upward trend and rental income is likely to improve in the short-term. These relatively stable real estate investment market conditions will act to attract both local and international investors to place their capital to work in the region.
Investment Sales Transaction Volume
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
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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 29,000 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. .