The unleveraged return on Asian real estate in 2009 was -0.2 percent, according to a new report by the Asian unit of Investment Property Databank (IPD), a global company that provides performance analysis for owners, investors, managers and occupiers of property.
IPD Asia pooled data on Singapore, Malaysia, Thailand, South Korea, Japan, Hong Kong and China. It drew on valuation data for 3,363 properties in 135 investment portfolios, with US$169.8 billion in total value as of end-2009.
The return on real estate was computed using the weighted total returns for the seven national markets, said IPD.
The seven markets had total returns that ranged between -6.0 percent for Japan and 15.4 percent for Hong Kong. The unleveraged return on Singapore real estate was -1.5 percent.
“Of course, no real investor would ever receive the local currency composite because of the exchange rate effects of getting their return back into their home currency,” noted IPD.
When this is considered, the Asia composite return declines slightly to 0.5 percent for investors taking their return in the US currency, but climbs to a positive 2.2 percent for Japanese yen investors.
Over a three-year period, the total return from Asian real state stood at 5.5 percent a year on a local currencies basis, 9.7 percent for investors taking their return in US dollar and -1.1 percent for Japanese yen investors.
Office property, which represents less than 52 percent of Asia real estate, was the worst performing sector at -2.2 percent and 5.1 percent over both one year and the past three years, respectively, on a local currency basis. Industrial/logistics property returned 2.7 percent last year and 7 percent per annum over the last three years, while retail property was the best performer over both periods at 5.1 percent and 10 percent.