Asia-Pacific property investment soars 24%, led by Japan: CBRE

The increase was led by strong investment activity in Australia, China and Japan, with these three markets likewise recording their highest annual totals since 2005. 

Japan was the stand-out performer with transaction volume surging a massive 110.5 per cent year on year to $23.7 billion thanks to the implementation of stimulus policies that boosted market sentiment.

Australia and China grew by 35.5 per cent and 17.9 per cent, respectively.

Led by Asia-Pacific institutional and private investors, 2013 also saw more cross-border activity, which increased 48.3 per cent to $18.7 billion. 

Notably, in the fourth quarter, Australia recorded its highest quarterly levels of purchases by foreign investors since 2005. Asian investors dominated, making up 75 per cent of the non-domestic buyers in Australia, with China, Malaysia and Singapore accounting for the majority of activity.

Japan likewise saw more activity from foreign property funds in the final quarter, which were particularly focused on buying office assets on the back of steady rising Grade-A office rent. 

Foreign investors were also keen to invest in China. However, high asset prices and limited investable assets remained an obstacle to making direct real-estate investments, though there was an increase in those using offshore platforms to make acquisitions and purchasing equity stakes.

Greg Penn, CBRE managing director for Capital Markets, commented that last year’s highs in investment volume and cross-border activity were driven by high levels of liquidity in the market, combined with factors like low interest rates and investors’ desire to deploy capital in a way that secures recurring returns.

Western property funds remained net sellers in the market, as some funds disposed of assets as they approached termination dates. However, some newly formed western property funds continued to invest in the region, with most of the interest focused on Japan.

Australia, China and Japan all recorded a high volume of deals involving office assets over the year, with Japan seeing interest from a mix of domestic and foreign investors. 

Investors in Australia were largely foreign, while in China over 50 per cent of the activity came from local players such as insurance companies and stated-owned enterprises.

Although there were a lot of deals in the office space in 2013, demand for high-quality modern logistics facilities is increasing due to comparatively better yields and modernisation in the sector, particularly in countries like China, Japan and South Korea, said Penn.

Investment turnover for industrial and logistics assets increased 79 per cent to $13 billion.

“Looking forward, we expect the Asia-Pacific investment market to remain active in 2014, but investment volume is unlikely to increase significantly, as investors will become more apprehensive over high pricing, while the availability of assets for sale could act to constrain trades. Singapore and Japan offer more upside potential, however, particularly in the office sector, as both markets are expected to see strong occupier demand which will drive rental growth,” said the MD.