Commercial property investment across the Asia Pacific is set to grow this year, attracting buyers from around the globe. According to Jones Lang LaSalle, capital markets in the region will increase between ten and 15 per cent in 2013, with total investment transaction volumes expected to reach USD 110 billion (GBP 70 million approximately). This is the result of increasing capital targeting in the sector.
Dr Megan Walters, head of research, Jones Lang LaSalle Asia Pacific Capital Markets, explained the Asia Pacific will witness a growth of institutional sources of capital and the rise of cross border investment. Real estate is proving itself to be an attractive investment prospect, with other assets experiencing low yields. Combined with the potential for inflation increases and a rise in the availability of new good quality stock, Asia is becoming a competitive and lucrative market.
Traditional sources of capital will also increase in 2013, becoming cross-border in nature. "US based and global funds are returning to Asia after a lull post GFC," Dr Walters wrote in a blog. "Australian pension funds will venture off shore, Japanese funds will look at South East Asia and Singapore will grow as a conduit for capital round the region." Indigenous Asian pension funds and insurance companies are also expected to be active in the market, growing investment portfolios on the back of rising middle classes channelling their earnings into savings, pensions and insurance products.
The beginnings of these trends were noted in 2012, with cross border purchasers accounting for USD 19.7 billion (GBP 12.5 billion approximately), equivalent to 21 per cent of all acquisitions. Some 80 per cent of these acquisitions took place in Australia, Japan, China and Hong Kong at USD 6.5 billion (GBP 4.1 billion), USD 5.1 billion (GBP 3.2 billion), USD 4.3 billion (GBP 2.7 billion) and USD 1.8 billion (GBP 1.1 billion) respectively. Dr Walters believes that cross border acquisitions could grow beyond the 15 per cent market growth.