Tuesday, April 20, 2010

Commercial property investment up in region

Commercial real estate investment transactions in the Asia-Pacific region continued to grow in the first quarter of 2010 to hit US$38.6 billion, up from US$28.2 billion in Q4 2009, according to a report by DTZ.

The increase was due to better economic conditions and the prospect of tighter lending in China, which encouraged investors there to bring forward purchases, DTZ said. Transactions may tail off in coming quarters, it said.

The Q1 tally is a record, beating the previous peak in Q3 2007. Investment activity during Q1 was also boosted by the return of recapitalised real estate investment trusts (Reits), which spent about US$2.4 billion. They also sold almost US$2 billion of property, but Q1 was the first quarter since Q4 2008 that Reits were net buyers, DTZ said.

While domestic investors remained the most active players in the Asia-Pacific market, foreign investors are slowly returning, said David Green-Morgan, head of research for DTZ in the Asia-Pacific.

China again led the region with over US$25 billion of commercial real estate transacted during Q1, accounting for 65 per cent of overall activity in the region. Much of this was due to investors replenishing land banks.

The largest deal in Q1 was also in China – the sale of the Guangzhou Asian Games site to a local developer for US$3.7 billion.

Most of the markets covered by DTZ recorded higher transactional activity in Q1 than Q4 2009. Outside China, investors were particularly interested in the region’s more mature stable markets and cities.

In Singapore, AEW Capital Management bought Robinson Point in Robinson Road for US$145 million during Q1 – one of the biggest deals in Singapore in a year.

Source: Business Times, 20 Apr 2010

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