Investment Market Update Asia Pacific Q2 2010

22 July, 2010

Asia Pacific investment activity decreases by 49% as land deals taper off amid stricter lending conditions in China.

Summary of the report

  • The volume of commercial real estate investments transacted in Asia Pacific decreased by 49% from US$42.5bn in Q1 2010 to US$21.5bn in Q2 2010. The tighter policy measures in China implemented by the government targeting mainly the residential sector had a corresponding knock-on effect to commercial property activity which drove a sharp fall in land sales for mixed-use developments. As such, sales volumes in China declined by 62% in Q2 2010 reaching US$10.1bn the lowest level since Q2 2009 according to DTZ research published today.
  • Commenting on the figures, David Green-Morgan, Head of DTZ Asia Pacific Research said: “Although Q2 2010 reported much slower investment activity, the first half of 2010 is still three times higher than the H1 2009, and Q2 2010 is 75% higher than Q2 2009. Going forward DTZ expects sales volumes to stabilise for the rest of the year.”
  • Despite the decline in sales volumes, China remains the most liquid market in Asia Pacific but its market share decreased during the quarter from 62% to 47% in favour of Australia, Taiwan and Singapore. In the rest of Asia Pacific investment activity was subdued. In Japan investment volumes tapered off by 57% to US$3.8bn after a very strong Q1 2010. Of the larger Asia Pacific markets only Australia maintained the level of activity seen in the first quarter with investment volumes reaching circa US$3bn. In Q2 21010 the rebound in investment volumes was particularly strong in India and Malaysia albeit from a very low base. Investment transactions in Singapore and Hong Kong recorded a moderate decline of 15% from Q1.
  • Cross-border investments remained subdued at 10% of overall transactions with predominately intra-regional investors active in Asia Pacific. The most active regional investors were from Hong Kong, Australia and Singapore spending in total US$1.8bn during Q2 2010. The money targeted predominately China, Singapore and Hong Kong.
  • David Green-Morgan added: “With an improving economic outlook across the region and investor sentiment improving rapidly, we expect capital growth to be positive across the majority of office and retail markets that DTZ forecasts in 2010.”

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