Advanced Search

The story appears on

Page C1

August 5, 2014

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Supplement

Commercial property market gathers momentum

By Cherry Cao | August 5, 2014, Tuesday | Print Edition

ASIA Pacific’s commercial real estate investment market gathered steam in the second quarter of this year following a seasonally slow start to 2014, global property adviser Jones Lang LaSalle said in a report.

Transaction volume jumped 38 percent from the first quarter to US$32 billion during the April-June period, the report said. The three-month volume was still relatively flat year on year as a result of a disconnect between vendors and purchasers on pricing. But, overall, the market has started to regain balance with more deals expected in the second half of the year.

“Over the quarter, we have seen direct investment into commercial real estate in Asia Pacific improve against the traditionally slower first quarter of the year, predominantly supported by some landmark portfolio deals in the region and larger REIT privatization,” said Stuart Crow, head of Asia Pacific capital markets at Jones Lang Lasalle. “As evidence of a strengthening leasing market gathers pace, and pent up investor demand from private equity groups, we expect year-end volumes to be in line with the record levels we saw in 2013 with a very busy second half.”

Mirroring the previous quarter, the larger markets of Australia and Japan accounted for the majority of the region’s transaction volume, despite the latter slowing to US$8.4 billion, an 18 percent decrease year on year.

Megan Walters, head of research for Asia Pacific capital markets at Jones Lang LaSalle said there are opportunities in the market.

“Given the pricing differentials and competitive nature of core markets, we are seeing more and more investors moving up the risk curve, in terms of asset quality and market selection, and considering non-core investments,” she said. “The improvements in the region’s occupier markets have supported this trend as under-managed assets present a trading opportunity in a strong rental climate.”

While transaction volume in Australia rose 7 percent year on year to US$7.8 billion, the market was generally slower than expected if the CPPIB/Dexus acquisition of the Commonwealth Property Office Fund is removed from the equation. However, cross-border investor interest in the market remains strong, most notably with Chinese investors who made a number of acquisitions in the second quarter.

Tax increase influence

Japan continued to deliver a strong deal flow throughout the second quarter despite an 18 percent year-on-year decline in volume to US$8.4 billion. The slowdown was attributed to April’s consumption tax increase, which brought forward a number of deals into the first quarter. The tax increase also had temporary influence on sentiment as investors hold off in an attempt to gauge the impact of the tax rise. The country’s investment climate remained positive with a strong pipeline of large deals and growing investor interest. Occupier markets continued to improve in line with the wider economy which, in turn, placed upward pressure on rents and encouraged more investment opportunities to market.

Following a slow start to the year, transaction volume on the Chinese mainland improved in the second quarter to reach US$4.9 billion, but remain down 14 percent year on year. Overall, the market appears to have stabilized following concerns earlier in the year around the growth outlook and runaway credit growth. Investor interest is picking up again and liquidity is expected to improve as a number of private equity groups on both the buy-side and sell-side are close to finding a balance on market pricing. Once the market finds this equilibrium, transaction activity is likely to pick up as investors get comfortable on pricing and more opportunities find their way to the market.

At US$1.8 billion, transaction volume in Hong Kong improved on a weak first quarter and is up 24 percent year on year. This growth, however, was predominantly driven by one large office transaction and investor sentiment remains relatively weak. The market continued to see ever increasing interest from Chinese mainland groups.

Supplement


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend