First-quarter investment in Asia-Pacific properties fell by 42% quarter-on-quarter to US$11.6 billion but is expected to pick up in the coming months thanks to interest in non-core assets and an easing lending environment, says the property consultant CB Richard Ellis (CBRE).
Pitchon: Thai market shows growth signals
The slow start to the year was driven in part by the New Year holiday period in January along with high investment volume in the second half of last year that removed several assets from the market.
The only market to buck the downward trend was Hong Kong, where investment volume doubled thanks to an improved lending environment.
All other areas across Asia-Pacific saw a decrease in investment volume.
James Pitchon, CBRE's executive director, said despite the quarterly decline, Thailand continues its steady recovery from last year's flooding, while local private investors are displaying a renewed interest in acquiring revenue-producing assets.
A Singapore-based property fund has acquired an office building in Bangkok, while low-rise residential developers are focusing on new land acquisition in flood-free areas.
Domestic capital continued to drive the market in the quarter, while cross-border acquisitions declined.
It accounted for nearly 86% of the total investment volume.
Deals completed by Asian real estate investment trusts, domestic private investors and end-users comprised 55% of investment turnover, up from 44% recorded in last year's fourth quarter.
Cross-border acquisitions continued to slide in the first quarter, falling by 69% to $1.6 billion and accounting for just 14% of investment volume during the period.
Investors continued to shift their focus away from core office assets due to the slowing leasing market, lack of quality products for sale and more attractive yields available in other sectors.
Investment volume for office assets was just half that recorded in the previous quarter, while volume in the retail sector was stable, down by just 4%.
Demand for this product is anticipated to increase as domestic consumption grew and international retailers expanded across the region.
Demand from local investors should remain firm in the near future thanks to robust interest in retail and logistics assets.
This along with the tight lending environment starting to ease as central banks across the region adjusted monetary policy will likely have a positive effect on the market.
