By Andrew Batt:
Despite global headwinds and a challenging global economic environment, strong investment volumes in the Asia Pacific property market point to signs of resilience, however, a slowdown in leasing activity points suggests that the region is not completely immune.
According to the latest analysis of the market by Jones Lang LaSalle in its Q2 2012 Asia Pacific Property Digest (APPD), direct commercial real estate investment activity rebounded in Q2 with volumes increasing 26 percent yo-y to US$26 billion. Japan saw the biggest y-o-y growth (290 percent) as it recovered from the Tohoku earthquake last March, while Hong Kong, Singapore and China also registered strong double-digit growth.
With stronger investment volumes, capital values also grew in most major markets. Jakarta and Beijing CBDs saw the largest q-o-q increases (9 percent and 11 percent respectively) while capital values in Shanghai, Tokyo and Sydney exhibited small gains of up to 1.5 percent.
However, office leasing activity was down about 10% in Q2 compared to the same period in 2011, attributable to corporate caution and the flow-on effects of ongoing economic uncertainty.
Dr Jane Murray, Head of Research Asia Pacific at Jones Lang LaSalle, said: “The Asia Pacific property markets are holding up relatively well given the global economic backdrop. Leasing activity levels should continue to trend moderately lower than last year’s record levels, while we expect investors will continue to search out opportunities, particularly in prime locations. In turn we anticipate rents and capital values will continue to grow in most markets, albeit at a slower rate than 2011.”
Jeremy Sheldon, Managing Director, Markets Asia Pacific, added: “While we are seeing some healthy growth forecasts for the Asia Pacific economy, leasing activity has steadied during the course of the year. There has been a decline in the established financial markets, however we are seeing strong demand in key South East Asian markets, and certain cities in China. While this pattern is likely to continue through to the remainder of the year, we are optimistic that leasing will remain largely stable.”
Todd Lauchlan, Country Head Jones Lang LaSalle Indonesia further noted that demand across all sectors in Jakarta continued to remain strong. Take-up in the office sector surged to around 28,000 sqm, nearly double that of 1Q12 driven by rapid corporate expansion in the country.
He said: “Strong corporate growth also provided a boost in the luxury apartment market in Jakarta as evidenced by steady rental growth.”
Get daily property news in Thai and English straight to your Inbox from Thailand’s number one property website. Subscribe today for free.