Investment volumes up by 10%

Preliminary figures released last week suggest that volumes have now reached approximately US$67 billion (Bt2 billion) year to date compared to $61 billion for the same period last year.
The key country to watch was Japan where direct commercial investment volumes went back to over $4.7 billion, in line with the same quarter in 2010, as investors looked to see how the markets recovered following the tsunami and earthquake and the subsequent dramatic fall in volumes during the second quarter.
Japan’s volumes in the third quarter of 2011 showed a resurgence from the $1.5 billion reported in the second quarter supported by the Bank of Japan’s programme to spur the Japanese Real Estate Investment Trusts (J-REIT) market, leading to significant buying activity by J-REITs. The resumption of this market is likely to support renewed international investor interest in the biggest market in the Asia-Pacific. The IMF’s outlook for Japan next year is for growth of 2.3 per cent based on reconstruction work following the disaster.
In China, Shanghai was the top location with the city being home to six out of the top 10 biggest deals, four offices, one retail and a hotel. The deal volume for China’s direct commercial property investments rose to approximately $2.8 billion, up 13 per cent year on year.
The landmark deal this quarter was Hong Kong’s Festival Walk, which was sold by Swire Properties to Mapletree Investments for $2.4 billion. This is the biggest by far involving a single built asset since 2007, and the largest in Hong Kong’s history. The market was active in South Korea with approximately $1.8 billion of deals recorded, double the volume in the same quarter last year with REITs actively buying Seoul office stock.
In Australia, volumes stood at the $3-billion mark, back to more usual transactional levels following the surge of overseas cash into the market last quarter which pushed volumes up to $4 billion. In Singapore, total volumes were at $1.2 billion, made up of plenty of smaller sub-$100-million deals, with industrial being an active sector.
On the back of increased investment volumes in the third quarter, most major markets saw either stable or increasing capital values. Across the region, the average quarterly increase in capital values was 2.6 per cent, slightly higher than the 2.4 per cent recorded in the second quarter of this year. Capital values in Jakarta and Beijing recorded the largest quarter on quarter increases of 14.2 per cent and 11.8 per cent, respectively, largely in tandem with rental growth. Sydney, Perth and Manila followed with quarterly increases of 4-6.5 per cent. Growth in capital values in Hong Kong and Singapore slowed further to between 0.8 per cent and 2.1 per cent, as investors became more cautious.