Last year proved to be a record year for real estate transactions,
with volumes hitting their highest levels since 2005 to reach US$90.4
billion.
The 24.2 percent year-on-year increase was led by strong
investment activity in Australia, China and Japan, with these three
markets each likewise recording their highest annual total since 2005.
Japan
was the standout performer with transaction volume surging a massive
110.5 percent year-on-year to US$23.7 billion thanks to the
implementation of stimulus policies that boosted market sentiment.
Australia and China grew by 35.5 percent and 17.9 percent year-on-year,
respectively.
Led by Asia Pacific institutional and private
investors, last year also saw more cross-border activity, which
increased 48.3 percent year-on-year to US$18.7 billion. Notably in Q4
2013, Australia recorded its highest quarterly levels of purchases by
foreign investors since 2005. Asian investors dominated, making up 75
percent of the non-domestic buyers in Australia, with China, Malaysia
and Singapore accounting for the majority of activity.
Japan
likewise saw more activity from foreign property funds in Q4, which were
particularly focused on buying office assets on the back of steady
rising Grade ‘A’ office rent. Foreign investors were also keen to invest
in China.
However, high asset prices and limited investable
assets remained an obstacle to making direct real estate investments,
though there was an increase in those using offshore platforms to make
acquisitions and purchasing equity stakes.
Greg Penn, Managing
Director for Capital Markets, Asia, at CBRE, said: “Last year’s highs in
investment volume and cross-border activity were driven by high levels
of liquidity in the market, combined with factors like the low interest
rates and investors’ desire to deploy capital in a way that secures
recurring returns—all of which contributed to the increased activity in
real estate.”
Western property funds remained net sellers in the
market as some funds disposed of assets as they approached termination
dates. However, some newly formed western property funds continued to
invest in the region with most of the interest focused on Japan.
Australia,
China and Japan all recorded a high volume of deals involving office
assets over the year, with Japan seeing interest from a mix of domestic
and foreign investors. Investors in Australia were largely foreign,
while in China more than 50 percent of the activity came from local
players such as insurance companies and stated-owned enterprises.
“Although
there were a lot of deals in the office space in 2013, demand for
high-quality modern logistics facilities is increasing due to
comparatively better yields and modernization in the sector,
particularly in countries like China, Japan and South Korea,” said Penn.
Investment turnover for industrial and logistics assets in 2013
increased 79 percent to US$13 billion, up from US$7.3 billion in 2012.
“Looking
forward, we expect the Asia Pacific investment market to remain active
in 2014, but investment volume is unlikely to increase significantly, as
investors will become more apprehensive over high pricing, while the
availability of assets for sale could act to constrain trades. Singapore
and Japan offer more upside potential, however, particularly in the
office sector, as both markets are expected to see strong occupier
demand which will drive rental growth,” added Penn.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
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