The property investment market in Asia suffered a massive fall in Q1 2009, with Singapore, Japan and Hong Kong suffering the most.
The region went through an 83 percent quarterly decline in sales, according to property consultants CB Richard Ellis’ latest research.
The industrial property sector in Asia experienced the biggest drop in its market segment, falling 95 percent over the same period a year earlier. This was followed by retail property and office transactions which slid 40 percent and 89 percent, respectively.
In the first three months of 2009, Singapore experienced further declines in investment sales, with hardly any isolated transactions noted. Potential investors and buyers are adopting a wait and see attitude, said the analysts.
The investment sales totaled to S$204.2 million, a marked drop of 51.8 percent from last quarter and a fall of 97.7 percent from Q1 2008.
The last time that the quarterly investment sales of Singapore plummeted to such low levels was in Q1 1998, when they were $49.28 million, as well as in Q3 1998, when they stood at $110.62 million.
Based on the analysis, institutional investment activity in Hong Kong has evaporated. Property investors are having a hard time to raise equity and debt.
However, the volume of investment deals below HK$100 million and demand for brand new residential housing units picked up significantly towards the end of Q1 2009. This was attributed mainly to several rounds of government interventions that resulted in lowering mortgage rates and gradual loosening up of commercial banks’ requirements on property lending.
The largest transaction in Asia was in Japan, with the sale of Osaka’s Sogo Department Shinsaibashi Store building for around US$383.6 million.
However, commercial property markets in South Korea and Japan in particular, are going through tight lending conditions. This has resulted in a decline in the overall transaction volume and an increase in inventory.
In Greater China, volume of transactions remained low due to falling capital values and the ongoing market slowdown. In Thailand, little investment activity was noted as bank financing was still hard to obtain.
The Malaysian and Indonesian markets remained quiet, although the decline was not as bad as the other markets around the region. The real estate investment market in India continued to slow under the impact of the downturn in the global economy.