Asia set to eclipse the US in property sales this year

Another sign the US is in decline?

The recovery in global real estate is being driven by Asia Pacific with its increase of 14% in invested stock during 2010, according to DTZ‟s flagship "Money into Property" report. This is in contrast to no real growth in the US and Europe. However, European stock did grow in local currency terms. Consequently, global growth was 3.4% in 2010 following a 3.0% decline in 2009. Asia Pacific‟s exceptional growth is forecast to continue into 2011 with a further increase in invested stock of 15%. Asia Pacific‟s growth in stock will be driven by both a strong development pipeline and an increase in capital values. This will move the region past the US to become the second largest commercial property market globally.

Within the region, growth in China and Australia (24% and 25% respectively) has led Asia Pacific‟s region growth. China has now joined the US and Japan as the third market globally with total invested stock surpassing US$1 trillion.

Global investment volumes increased 76% in 2010 to the highest level since 2007. Asia Pacific transactional levels more than doubled to a new record, surpassing Europe for the first time. This record was driven by increases in China and Japan in the first half of 2010. Investment transaction volumes in Asia Pacific are expected to maintain this record level in 2011, with the market remaining active. The impact of economic stabilising policies across the region and the earthquake in Japan limiting further volume growth for 2011.

The latest DTZ Fair Value Index™ (FVI) score for Asia Pacific at 65, is well above the global FVI score of 50. 80% of Asia Pacific markets offer attractive opportunities to investors, with 45% of these categorised as HOT. Whilst yield tightening has been consistent over the past two years, the focus has moved to the strong prospects for rental growth in the region. Markets within the region are experiencing increased occupier demand from expanding domestic companies and multi-nationals locating to the region.

Chua Chor Hoon, Head of South East Asia Research, noted: “Singapore's commercial and industrial markets remain in the HOT category, similar to the Q4 2010 findings, as we expect continued price and rental increases based on the projected economic growth of 4-6% in 2011 and over the next few years. The Singapore office market is ranked among the top five in the HOT category among the Asia Pacific cities covered in this study. Capital values are expected to re-price at a faster rate compared to 2010 with growing interest from institutional investors.”

David Green-Morgan, Head of Asia Pacific Research says: “Despite any future policy changes, we expect Asia Pacific‟s momentum to continue on the back of strong economic growth, lack of legacy debt issues and strong investor interest.”