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Asian Real Estate Market Monitor – Nov.09

By on Nov 20, 2009 in Research

Transaction Volume Remains Solid But Hong Kong Cools

  • China witnessed steady investment activity in October as banks continued to snap up quality en-bloc office properties while second-tier cities including Wuhan, Chengdu and Chongqing also saw plenty of activity. Prices recovered to the extent that foreign institutions were looking to dispose of assets in the hope they could break even or perhaps even post a profit. Insurance companies were on the verge of entering the market following the introduction of the revised insurance law.
  • Sentiment in Hong Kong softened over the course of the month after the government intervened to cool down the market amid worries of a housing bubble. The market is expected to turn quieter for the remainder of the year as investors wait and see how the market will respond to the change in policy direction. However, selling pressure remains low.
  • Japan saw the completion of a large volume of smaller deals yyas investors continued to regard Tokyo as a core market offering relative stability. New players and core European money emerged and there continued to be interest from private Hong Kong and Chinese buyers and larger Hong Kong-based institutional investors.
  • The Korean market continued to recover with impressive thirdyy quarter GDP growth of 2.9% further strengthening investor sentiment. Financially strong end-users dominated transactions for quality office properties during the review period. However the weak leasing market will impact the recovery in the office investment market going forward.
  • Transaction volume in India was underpinned by the residentialyy sector, and in particular the affordable housing segment. Encouraged by the gradual return of demand in the commercial office sector, several major developers restarted commercial projects. Meanwhile, local real estate developers continued to tap the IPO route to raise new funds.
  • Singapore was quiet as investors adopted a cautious attitude ahead of the holiday period. Developers continued to add to their land banks and were actively searching for residential sites to purchase. Property funds were scouting for deals but most were unable to underwrite the returns that they require in order to justify any acquisition.

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