Commercial property investment in asia pacific hits record high

Photo credit: Yohanes Budiyanto

Data from Jones Lang Lasalle reveals that last year was the strongest ever year on record for commercial property markets in the Asia Pacific region. Sales volumes leapt 29 per cent year-on-year in 2013, with the total investment of $126.7 billion outperforming even the 2007 peak of $120.5 billion.

"2013 proved to be an outstanding year for Asia Pacific commercial property markets, exceeding our revised expectations of US$ 120 billion," says Stuart Crow, head of Asia Pacific capital markets at Jones Lang Lasalle said.

"Unrelenting demand has prevailed in spite of macro concerns around China's growth outlook, stability in the EU, and the US government's fiscal strategy. As the market gains further clarity on these issues, we expect a more stable growth outlook which should lead to activity in 2014 surpassing that of 2013."

The staggering growth was fuelled principally by core markets, explains JLL. Japan saw investment grow 67 per cent annually, ranking as the third most active market in 2013 behind the US and UK. China, Australia and Singapore also enjoyed record levels of investment, with activity climbing 66 per cent, 30 per cent and 40 per cent year-on-year respectively.

Australia's transaction volumes were driven by both foreign and domestic investors to climb 62 per cent in the final quarter of 2013 year-on-year. China recorded transaction volumes of $8.5 billion in the same three months, an annual surge of 71 per cent. Indonesia also enjoyed a strong year, boasting the highest rental increase in the region.

Dr Megan Walters, head of Research for Asia Pacific capital markets, adds: "In 2013, we continued to see a mismatch between supply and demand across a number of markets in the region. As a result, investors moved up the risk curve in search of higher yields and to mitigate against potential pressures from global fiscal policy.

The record growth is not expected to stop there, though, adds Walters: "Given the strength of investor sentiment and on-going demand, we expect markets to perform as well, if not better, than 2013 for the remainder of 2014."