Office and investment property markets across Asia remained strong in Q1 2010, as the positive sentiment among investors were sustained, said CBRE.
 |
The steady flow of small- and medium-size transactions seen in H2 2009 in the investment market continued through this year.
The total direct property investment in Asia surged 215 percent year on year from a low base in Q1 2009, when activity was muted, to US$16.5 billion in Q1 2010.
Transaction volume slipped quarter on quarter in Hong Kong, Taiwan and China despite the strong year-on-year growth.
This decline in Greater China was because investors turned cautious with the changes made in the government policy to cool rapidly rising prices.
Elsewhere in Asia, Singapore, Korea and Japan saw a strong quarter-on-quarter rebound in investment activity, with the transaction volume in these markets increasing 24 percent, 32 percent and 45 percent, respectively.
Transactional activity throughout Asian investment markets was largely driven by domestic investors, who accounted for 72 percent of the total volume. However, the US$12-billion worth of transactions completed by domestic investors was down US$2.1 billion from Q4 2009 – indicating an increase in cross-border investments.
CBRE said that in Q1 2010, the escalating proportion of cross-border activity was partly attributed to the return of international real estate funds.
“The quarter saw both opportunistic and core international institutional investors return to Asian real estate markets, attracted by signs of a sustained recovery,” said Mr. Andrew Ness, executive director of CBRE Research Asia.
“At the same time, well-capitalised Asian Reits and sovereign wealth funds resumed the portfolio expansion they halted during the most severe period of the global economic downturn, and their return was marked by a rising level of acquisitions in Japan and Singapore.”
In the office sector, growth in net absorption for the region translates to a recovery in demand.
Most cities polled recorded positive absorption of space, and the overall vacancy in Asian cities dropped quarter on quarter by 80 basis points to 11.8 percent.
Overall office rents in Asia fell 0.1 percent in Q1 – much less than the 1.9 percent decline during the previous quarter, according to CBRE’s data.
Office leasing activity is expected to turn robust in H1 2010 as more firms boost property budgets to support overall regional expansion plans, said Mr. Ness.