Industry News

Asian Real Estate Investment Market Buoyed in 3Q

(PROPERTY REPORT) - The Asian real estate investment market continued to gain momentum in the 3Q of 2009 as capital values generally stabilised, sentiment improved and the bid-ask spread narrowed, particularly for quality yield-accretive assets in prime locations.

Direct real estate investment in Asia jumped 25 percent quarter-on-quarter to an estimated US$9.1bn. Hong Kong accounted for 36 percent of the total volume followed by China, Korea and Taiwan. However, overall transaction volume remained low in the first nine months of 2009, falling by 49 percent year-on-year according to CB Richard Ellis’ 3Q 2009 Asia Investment MarketView report.

The office sector attracted US$4.7bn of investment during the quarter, or 52 percent of the total flow of capital. Residential properties accounted for 16 percent, with the retail sector comprising 13 percent of the total volume. Despite the relatively low transaction volume in the hospitality sector, a total of six hotel transactions worth a combined total of US$300m were concluded during the quarter, surpassing within three months the five transactions recorded in the first six months of 2009. Transactions involving industrial properties also showed signs of improvement with a total of 24 deals concluded between July to September, a similar figure to the total number of deals completed in the first six months of the year.

Amongst the key Asian investment property markets, Hong Kong was most active, accounting for 36 percent of total investment in the region. The US$3.2bn worth of transactions completed in Hong Kong during the review period was only slightly less than the peak recorded in the territory in the fourth quarter of 2007. Private and local buyers demonstrated a strong appetite for investment property while a number of foreign institutional investors took advantage of market conditions to take profits or reduce their overall portfolio size by disposing of selected assets. The largest transaction in Hong Kong recorded during the third quarter comprised the en-bloc disposal of Nexxus Building for approximately US$465m, which was also the largest deal completed in
Asia during the review period.

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