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SINGAPORE, December 3, 2010 – New research from Jones Lang LaSalle’s Capital Markets Bulletin reveals that investment volumes are increasing in the region. Direct commercial property transaction volumes for Asia Pacific amounted to USD 18.2 billion in 3Q10. Singapore was the top market mover in the third quarter recording a huge rise of 358% growth in investment volumes on several large transactions in 3Q10 and was the third biggest market behind Japan and Australia in terms of total investment volumes.Further improvements in business and investor confidence during the quarter supported capital values growth which increased in most of the monitored Asia Pacific markets. The Hong Kong (Central) and Beijing (CBD) markets posted increases of 8.7% q-o-q and 8.6% q-o-q respectively.
In Shanghai and Beijing investor sentiment remained buoyant with Asian buyers active in the market, underpinned by rental growth. Most Asian markets saw office market yields compress slightly by up to 30 basis points, with increased investment activity in Australia supporting tightening investment yields in both Sydney and Melbourne.
Stuart Crow head of Asia Pacific capital markets said, “as the market continue to stabilise, we are seeing more and more investors looking to pursue transactions. We will continue to see a further increase in these volumes to the end of this year, but the number of buyer’s versus sellers is likely to come back to more realistic levels next year.”
The report states that investors are likely to continue to be attracted to assets that offer good inflation protection by allowing continuous re-pricing of income streams, hotels and residential assets. Retail assets have been popular with investors in 2010, usually accounting for around 17% of total investment deals but this year reaching about 22%, this may be expected to continue into next year.
Dr Megan Walters head of research for Jones Lang LaSalle capital markets said, “we are seeing a rising interest from inter-regional investors who are looking at the differential in growth rates between Asia Pacific and the rest of the world. However, the constraint to increasing Asian investment volumes will be the limited availability of investment-grade assets. This is in part from the restrictions on land ownership place in some countries in Asia, for example on foreign ownership, and in part from existing investors unwilling to part with their hard-won Asian assets at a price buyers want to pay.”
“The outcome may be continued upward pressure on pricing up in major Asian cities, as yields become compressed compared to what one can achieve in mature markets such as London. The alternative for investors in Asia will be to look at the emerging markets and second tier cities. Next year’s investment volumes for Asia Pacific are estimated at around US$88bn, broadly 15% above the likely 2010 total volumes.” She said.
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