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Real Estate Investment in Asia Surged in Q1

By on May 18, 2010 in Research

Bangkok Post 12 May 2010

Real Estate Investment in Asia Surged in Q1, Says CBRE

But year-on-year rise reflects slump in 2009

Total direct real estate investment in Asia in the first quarter soared by 215%year-on-year to an estimated US$16.5 billion, reflecting a buoyant market, according to the latest quarterly Asia Investment Market View conducted by CB Richard Ellis

But the first quarter’s strong year-on-year growth in transactions also reflected a relatively low level of trading activity at the start of 2009.

Activity across Asia’s markets was largely driven by domestic investors, who accounted for 72% of investment volume.

“The quarter saw both opportunistic and core international institutional investors return to Asian real estate markets, attracted by the signs of a sustained recovery,” said Andrew Ness, executive director of CBRE Research Asia.

Highly capital-Up 215%ised Asian real estate funds and sovereign wealth funds also resumed portfolio expansion, which had stalled during the global downturn. Their return was marked by rising levels of acquisitions in Japan and Singapore.

Prime office properties continued to dominate, attracting more than $5.8 billion, or 35% of all investment. Office properties also provided seven of the quarter’s ten largest transactions.

Retail properties drew 14% of investment over the quarter, while residential properties attracted 13%.

But residential deals, despite providing a relatively high share of the total, were worth $16.5bn just $2.1 billion a 48% drop from the fourth quarter of 2009. This partly reflected tighter monetary policy along with fiscal and bank regulatory measures from Asian governments seeking to cool their residential markets, said Mr Ness.

A revival in Asia business and tourist travel showed up in the first quarter in a surge of activity in the hospitality sector, which saw seven hotel transactions concluded worth a total of $590 million. This sum contrasts with $62 million and $26 million recorded in the first and fourth quarter of 2009.

Industrial property transactions surged by 21% quarter-on-quarter to $1.5 billion.

The company expects the continued recovery of the regional economy, allied with low interest rate regimes, to provide a favourable investment environment for real estate investors.

Mr Ness said 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 attract both local and international investors to put their capital to work in the region.

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