Asia Pacific commercial real estate 2013 investment volumes are poised for a record year

October 28, 2013 / By

We have raised our 2013 year end forecast for transaction volumes into Asia Pacific commercial real estate from USD 110 billion to USD 120 billion, following a 33% increase in 3Q 13 volumes on the same period last year. This result would see the Asia Pacific investment markets on par with 2007 as the largest year of transaction volumes on record. On a year to date basis transaction volumes ate up 25% in Asia Pacific compared to 20% globally.

Following the upward revision to our 2013 investment volume forecast, we believe the momentum will continue into 2014 with investment volumes to reach record levels of USD 130 billion.

Transaction volumes across Asia Pacific in 3Q13 reached USD 30.0 billion, up 33% on the same quarter last year. Positively, every quarter so far in 2013 has surpassed the transaction volumes of their corresponding quarter in 2012. As a result, year to date investment activity reached USD 89.6 billion – up 25% on the same period in 2012.

Looking round the region at the larger markets; Japan continues to show signs of improving confidence, a strong rental growth outlook and very low all-in funding costs. As a result, we expect Japan to again contribute to a large share of the transaction growth. China continues to move through a stage of structural transaction growth with an ever growing pool of stabilised assets, stemming from the large development cycle seen over the past five years. Consequently, asset turnover rates need not improve to maintain growth in the investment market. Foreign investors are also keeping a finger on the pulse in China despite the on again off again concerns around credit risk and macro cooling.

Australia’s investment markets have delivered strong numbers over the past few years with a seemingly unfettered influx of offshore investors. Interest remains very strong and we expect another solid year in 2014 with a continued revival from domestic investors.

In Hong Kong and Singapore governments continue to monitor the markets. Transaction volumes in Hong Kong have slowed considerably in 2013 following government cooling measures. As a result, there is scope for upside moving forward given the low base of this year; however a standoff between buyers and vendors could emerge given tight entry yields in the current market. Investment activity in Singapore has been supported by a few very large deals, with less activity in the lower end of the market owing to the more restrictive lending conditions imposed by the government.

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