Asia-Pacific’s investment volumes in the commercial real estate market jumped 8 percent in Q3 to $29.6 billion, according a report released by DTZ Research.
Singapore’s investment volumes exceeded the $3 billion mark recorded in 2008, while Malaysia’s investment volumes hit $1.9 billion in Q3, a 233 percent growth from the second quarter, driven by large property acquisitions of retail assets by domestic REITS.
“Our report shows that improving confidence in the regional economy has boosted investment activity across the majority of Asia Pacific markets resulting in record increases in Malaysia and Singapore. Our recent report, ‘The Great Wall of Money’, estimates that $71 billion of new capital will target the region in 2011. Combined with the positive economic outlook, we expect investment volumes to reach $145 billion in 2011,” said Tony McGough, global head of DTZ Forecasting & Strategy Research.
The research firm said the uptrend is likely to continue for the rest of the year up to next year, with investment volumes forecasted to hit $145 billion next year, an increase of 12 percent from the $129 billion forecast for this year.
The report revealed that established markets of Hong Kong and Australia recorded an investment increase of more than 40 percent to $1.7 billion and $4.3 billion in Q3, respectively, while Japan climbed 25 percent quarter-on-quarter to $4.7 billion.
In China, the additional restrictions implemented by the central government in the residential sector have continued to affect the commercial property volumes in the country, decreasing 21 percent to US$11.9 billion in Q3. However, the level of decline has slowed since the previous quarter, and China remains the most liquid market in the Asia Pacific, with 40 percent overall activities in Q3.
“Despite the continuing slow down in bank lending in China, transactional activity around the region continues to improve with investors now starting to look outside their own domestic markets for opportunities,” said David Green-Morgan, head of DTZ Asia Pacific Research.
The value of retail transactions rose 56 percent to $9.9 billion, surpassing office transactions volumes for the first time. Significant deals in the retail sector include the sale of Sunway Pyramid Shopping Mall in Malaysia for $729 million and the Seibu Ikebukuro department store in Japan for $1.4 billion.
Meanwhile, office transactions climbed 20 percent to $8.2 billion, while transactions of industrial assets rose 8 percent to $2.3 billion. Domestic investors continue to dominate the acquisitions in Q3 with 89 percent of the overall investment, but down from 91 percent in Q2.
“The economic outlook for Asia Pacific remains optimistic with capital and rental values predicted to increase across nearly all markets during 2011. We expect institutions to become increasingly significant in the region particularly sovereign wealth and pension funds,” said Green-Morgan.