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Asia Pacific Market Sentiment Remains Positive

By on Nov 02, 2011 in Property News

But Deal Flow Weakens towards End of Third Quarter

  • Australia continues to record growth in cross-border acquisitions
  • Institutional investors most active but more corporations buying for self-use
  • Market fundamentals remain healthy but investors will exercise more caution

Commercial real estate sales in Asia Pacific increased 36% q-o-q in the third quarter of 2011, although the bulk of the deals were completed in July and transaction volume tapered off in the following two months. Transaction volume in Asia grew by 55% q-o-q whilst the Pacific was largely unchanged, according to CBRE’s Asia Pacific Capital Markets MarketView report for Q3 2011.

The total volume of cross-border acquisitions across the Asia Pacific region rose by 112% q-o-q although this was largely due to Mapletree’s acquisition of Festival Walk in Hong Kong. In Australia foreign investors accounted for 51% of investment spend in the third quarter, a level even higher than the 39% recorded in the previous quarter and significantly stronger than trends witnessed in 2010. Singaporean investors continued to be the major overseas purchasers across the region.

Institutions remained the most active buyers during the period, accounting for a third of investment volume. Most were Asian-based and making acquisitions within the Asia Pacific region, whilst global funds either remained in selling mode or found it difficult to justify pricing. REITs remained generally acquisitive and comprised 17% of total turnover. Non-real estate companies were also acquiring property, either for self-use or as an investment alternative to deposits.

“The divergence between Asian based and other overseas investors witnessed in recent quarters is expected to continue in the fourth quarter. Investors from within the region remain cash rich and will continue to selectively seek opportunities to acquire quality assets. In contrast, some property funds with capital sourced from European investors will remain under pressure to reduce the size of their global portfolio by disposing of assets, including from within Asia,” said Greg Penn, Executive Director of Institutional Investment Properties for CBRE Asia. “At the same time, however, newly formed core funds from the United States and Eurozone are expected to begin looking beyond their home markets and into Asia Pacific in light of the more positive economic outlook in the region,” he continued.

“Real estate market fundamentals in Asia Pacific remain healthy and this, combined with the more positive regional economic outlook than elsewhere, will continue to attract investment,” commented Dr. Nick Axford, Executive Director and Head of CBRE Research, Asia Pacific. “However, rental appreciation in the office sector is beginning to ease and multinational occupiers are less willing to sanction significant capital expenditure for real estate. Investors will turn more cautious and deal volume is likely to moderate in the short term unless sellers become less aggressive on pricing.” he continued.

Notes to Editors

CBRE’s investment transaction data presented in this report is based on real estate transactions valued US$10 million and above. It included real estate transactions reported in 25 major markets in 12 countries across Asia Pacific.  It included office, industrial, retail and mixed use properties. Development site transaction is excluded. Transactions prices are tracked in local currencies and converted to US dollars using exchange rates as recorded on the last day of the respective quarters of the year.

For more information regarding investment property for sale, please contact CBRE’s Investment and Land Services.

If you wish to download a full report of Asia Pacific Capital Markets MarketView, please click here.

Chris Hardy has extensive research experience. Chris specializes in property research internationally writing for CBRE specifically about global issues and trends.

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