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HONG KONG: Asian investors are expected to be the dominant cross-border investors in Asia Pacific in the second half (1H) of 2010, according to Jones Lang LaSalle's (JLL) latest Global Market Perspective.
More portfolio deals are likely to be seen later in 2010 as groups such as pension funds and private equity funds continue to acquire prime-quality assets that offers stable and secure incomes, said JLL.
However, JLL cautioned that the ongoing concerns about the global economy especially in Europe and United States and the deceleration in China's economic growth among others might affect investor appetite and hamper investments.
On the upside, 1H 2010 have seen reasonably strong increases over the corresponding periods of 2009 globally. JLL said that if this trend continues, aggregate volumes are likely to be around 30% higher this year.
In 2Q 2010, preliminary figures indicated that direct commercial real estate investment volumes across the globe stood at US$66 billion (RM207.24 billion), a figure similar to 1Q 2010 but nearly double the level of the market bottom a year ago.
Investment volumes in Asia Pacific fell 34% in 2Q compared to 1Q, but compared to the same quarter last year, volumes are up by 21%.
With a large number of large transactions pending and market fundamentals improving, a renewed uptick in investor activity is expected during 2H, said JLL.
Portfolio deals that were a feature of 1Q were notably lesser in 2Q as private investors withdrew from the market in China. Subsequently, China recorded the sharpest falls in transactions during 2Q within Asia Pacfic.
However, JLL said, cross-border interest remained strong for quality assets. Hong Kong-listed Hang Seng Bank and Beijing Huarong Investment Company acquired assets in Shanghai and Beijing respectively in 2Q.
Investment volumes in Australia and Japan were down from previous quarter, though there have been notable transactions in Japan and the Australian market remains buoyant with the higher-priced office assets remaining an attractive proposition for international investors.
Private companies are still active for assets below A$50 million (RM138.88 million) and there was robust demand for shopping centers in 2Q with acquisition by a Lend Lease-led joint venture in both Perth and Melbourne, said JLL.
Despite falling volumes, capital values across Asia Pacific region stabilized or yields were compressed in most markets due to continued economic expansion and the bottoming out of rents.
Further increase in capital values were seen in most of the leading markets in 2Q. Guangzhou posted the largest quarterly increase of +9.6% followed by +7.9% in Shanghai and +7.4% in Hong Kong.
JLL said the increase in capital values were mainly fueled by domestic investor demand.
However, the scale of compression has reduced as rental growth catches up with that of capital values, added JLL.
As countries such as Malaysia, India, Australia and Taiwan hiked their benchmark interest rates, yield spreads above the cost of debt have continued to narrow since 4Q 2009.
Meanwhile, leasing demand continues to strengthen across Asia Pacific main market with a 10% increase in net absorption. Upgrading and relocations continues to drive the absorption rate, although more expansion plans were noted.
Multinationals are starting to become more active in the market that has been largely dominated by domestic firms. JLL noted that the demand differs from country to country, citing as an example; the demand in Greater China are stronger than those in North Asia, including Tokyo.
Most market registered increasing or stable rentals in 2Q, with markets in Greater China showing the strongest growth, led by Hong Kong, which gained 9.3%, compared with 1Q. The rents in Singapore registered a growth of 2.9%, following steep declines over the last two years.
While continued falling rents are seen in markets still suffering from weak demand, the pace of decline has slowed considerably.
More portfolio deals are likely to be seen later in 2010 as groups such as pension funds and private equity funds continue to acquire prime-quality assets that offers stable and secure incomes, said JLL.
However, JLL cautioned that the ongoing concerns about the global economy especially in Europe and United States and the deceleration in China's economic growth among others might affect investor appetite and hamper investments.
On the upside, 1H 2010 have seen reasonably strong increases over the corresponding periods of 2009 globally. JLL said that if this trend continues, aggregate volumes are likely to be around 30% higher this year.
In 2Q 2010, preliminary figures indicated that direct commercial real estate investment volumes across the globe stood at US$66 billion (RM207.24 billion), a figure similar to 1Q 2010 but nearly double the level of the market bottom a year ago.
Investment volumes in Asia Pacific fell 34% in 2Q compared to 1Q, but compared to the same quarter last year, volumes are up by 21%.
With a large number of large transactions pending and market fundamentals improving, a renewed uptick in investor activity is expected during 2H, said JLL.
Portfolio deals that were a feature of 1Q were notably lesser in 2Q as private investors withdrew from the market in China. Subsequently, China recorded the sharpest falls in transactions during 2Q within Asia Pacfic.
However, JLL said, cross-border interest remained strong for quality assets. Hong Kong-listed Hang Seng Bank and Beijing Huarong Investment Company acquired assets in Shanghai and Beijing respectively in 2Q.
Investment volumes in Australia and Japan were down from previous quarter, though there have been notable transactions in Japan and the Australian market remains buoyant with the higher-priced office assets remaining an attractive proposition for international investors.
Private companies are still active for assets below A$50 million (RM138.88 million) and there was robust demand for shopping centers in 2Q with acquisition by a Lend Lease-led joint venture in both Perth and Melbourne, said JLL.
Despite falling volumes, capital values across Asia Pacific region stabilized or yields were compressed in most markets due to continued economic expansion and the bottoming out of rents.
Further increase in capital values were seen in most of the leading markets in 2Q. Guangzhou posted the largest quarterly increase of +9.6% followed by +7.9% in Shanghai and +7.4% in Hong Kong.
JLL said the increase in capital values were mainly fueled by domestic investor demand.
However, the scale of compression has reduced as rental growth catches up with that of capital values, added JLL.
As countries such as Malaysia, India, Australia and Taiwan hiked their benchmark interest rates, yield spreads above the cost of debt have continued to narrow since 4Q 2009.
Meanwhile, leasing demand continues to strengthen across Asia Pacific main market with a 10% increase in net absorption. Upgrading and relocations continues to drive the absorption rate, although more expansion plans were noted.
Multinationals are starting to become more active in the market that has been largely dominated by domestic firms. JLL noted that the demand differs from country to country, citing as an example; the demand in Greater China are stronger than those in North Asia, including Tokyo.
Most market registered increasing or stable rentals in 2Q, with markets in Greater China showing the strongest growth, led by Hong Kong, which gained 9.3%, compared with 1Q. The rents in Singapore registered a growth of 2.9%, following steep declines over the last two years.
While continued falling rents are seen in markets still suffering from weak demand, the pace of decline has slowed considerably.
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