Following a record year in 2013, preliminary transaction volumes in Asia Pacific in the first quarter of 2014 slowed to USD 23.1 billion. Some of the larger markets however delivered solid performances with Japan and Australia up on the same quarter last year by 15% and 31% respectively. Elsewhere round the region new sources of capital are actively looking at Asia Pacific, particularly core gateway cities. We expect volumes throughout the year to pick up and show overall growth on 2013 as a number of large megadeals are being prepared for disposal. There is also an expectation of a significant turnover in the private equity market with a wave of closed-end funds maturing throughout the year. On the flipside, a number of large PE firms have raised fresh equity so that segment of the market will be active too.

In terms of volumes in the key larger markets, Japan was again the standout performer across the region, accounting for a whopping 53% of regional transaction volumes. Investment volumes reached USD 12.2 billion, up 15% on the same quarter of last year. Portfolio transactions and foreign investors played a healthy role during the quarter and a number of large megadeals also boosted overall volumes. We think the general trend in Japan will remain positive from a liquidity and transaction standpoint and we expect the market to continue experiencing strong growth in 2014.

Transaction volumes in Australia commenced the year in line with expectation with volumes up 31% from the same time last year, but down 34% from the strong finish in 4Q13. Overall volumes in 1Q14 reached a reasonable USD 4.2 billion. Investment activity in 2014 will be hard pressed to match the 2013 highs as opportunities become scarce and fewer large assets are finding their way to the market. Foreign investors remained active in 1Q14, accounting for 32% of all deals.

In China investment volumes moderated in 1Q14, down 18% y-o-y to USD 3.0 billion. The quarterly volumes in China are highly variable on a quarter by quarter basis for example moving from USD 6.1 billion in 2Q 12 to USD 2.6 billion in 3Q 12 and back to USD 8.4 billion in 4Q 13. The debt markets remain a concern following a large default by a Chinese developer, highlighting the prevalent risk being taken by some firms and the potential stress in the Chinese economy, however we anticipate the commercial property market will see an acceleration in transaction activity through the rest of the year driven by private equity groups.

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