Asia Pacific Real Estate Investment Market Bulletin 2Q2009

Relaxation of Banks’ Lending Policies Stimulated Asia Pacific’s Property Investment Sales in 2Q2009
Both Office and Residential Investment Yields Edged Down


According to Colliers International’s Asia Pacific Real Estate Investment Market Bulletin – 2Q2009, the overall investment sentiment in the region saw a distinct improvement in past quarter. “Despite the fact that the region is still in the amidst of a consolidation, the pace of downward adjustment of a number of economic indicators has tapered off,” said Simon Lo, Director of Research & Advisory, Colliers International Hong Kong. “This not only indicates that the worst situation is over, but that there is also more hope for a global recovery towards the end of 2009.”

Buying interests were concentrated primarily on the office and residential properties in the region in 2Q2009. Office investment yields in Asia Pacific edged down by 19 basis points (bps) during the quarter, with Hong Kong’s dropping the most at 110 bps. Of the 25 cities included in the report, the office investment yield in Bangalore, India was the highest at 14.0% per annum, and that of Hong Kong and Singapore the lowest, at 4.1% per annum. Meanwhile, the residential investment yields also recorded a fall of 29 bps across the region.

During 2Q2009, the proactive initiatives implemented by the governments of various countries/cities enlivened the real estate investment market. For example, in Mainland China, the minimum capital ratio for residential and commercial development was lowered, with a reduction ranging from 5% to 15%. In Taipei, insurance companies have been permitted to participate in auctions and development projects since 2Q2009.

Meanwhile, there were also other drivers for the distinct growth of sales activity in the region in 2Q2009. “The market sentiment was generally improved due to the growth of stock market prices,” said Antonio Wu, Regional Director, Asia Investment Sales. “More importantly, the gradual relaxation of banks’ lending policies on property financing provided sufficient liquidity to stimulate the increase of real estate investment in the region.”

“During 2Q2009, the real estate investment market saw active buying by a group of cash-rich individuals and local companies, who made pre-emptive moves by snapping up quality investment opportunities in 2Q2009,” added Antonio.

For example, China Development Bank bought No.C1 Beifeng Finance Street, an office development comprising 45,966 sq m in Beijing, for US$186.66 million (RMB 1,275.22 million). In Singapore, a group of private high-net-worth individuals bought Anson House, a commercial development of 76,127 sq ft, for US$58.63 million (S$85.00 million).

Looking forward, high-net-worth individuals, local companies and wealthy families will have sustained buying interest in the real estate investment market, if liquidity remains plentiful and a global economy recovery materialises before the end of 2009. Meanwhile, institutional investors are expected to return to the real estate investment market if there are signs of solid improvement in the occupational demand over the next 6 to 12 months.

source : Colliers