Asia Leads as Global Property Market Shows Improving Health
London, 3 March 2010 – Led by Asia, the world’s property markets in the major economies have all started showing signs of improving health, according to CB Richard Ellis’ latest Global MarketView report.
Global and regional highlights
• Most economies in the Asia Pacific region showed recovery in external demand in 2009 amidst improved business sentiment, and as industrial production returned to an expansionary phase of the economic cycle. Economic growth started to accelerate and the workforce began growing again.
• In Asia Pacific, direct trading in commercial real estate started to pick up through the second half of 2009 and reached a climax in the fourth quarter in the Pacific region. Private investors had been carrying trading volumes during the downturn, buying as much as 60 per cent of all traded property; but domestic and foreign institutions rejoined the market in the fourth quarter, resulting in the largest transactions in the office and retail sector in two years.
• Capital markets across the Americas showed some life in quarter four 2009, with commercial real estate investment activity in Latin America improving as both local and foreign investors actively sought investment opportunities in the region. Product shortages and price expectations remain important factors for investment activity.
• The real estate investment market in Europe continues to strengthen, with quarter four 2009 seeing further improvement in sentiment, activity and pricing. Total European investment turnover jumped to nearly €28 billion in the fourth quarter of 2009, the highest level since quarter three 2008, which was pre-Lehman and a 51 per cent increase quarter over quarter.
Nick Axford, Head of EMEA Research and Consulting, said: “Globally, we are seeing clear signs that some economies are starting to recover, and commercial real estate investment sentiment is also improving for prime property. There are pockets of solid recovery in both leasing and investment activity, but the investment market recovery leads that of leasing across all global regions.
“Although China’s economy and real estate market commands most of the current headlines, the Pacific region seems particularly well placed to outperform in 2010. Yields have compressed in each property sector, and volumes continued to grow in the final quarters of 2009. Asia, too, had a strong final quarter last year, and saw significant improvements over the first nine months of 2009. Most of the activity was in China, Hong Kong and Taiwan.
“In Europe, it was notable that the total value of investment transactions increased in each of the last three quarters of 2009, establishing this as a consistent trend rather than a one-off result. Europe also saw investment yields continuing to fall, but only for prime properties. Transaction volumes increased significantly in the second half of last year compared the first, and this improvement seems to be continuing in 2010; yet rents are still under downward pressure in many markets.
“Overall, the global commercial real estate market is showing clear signs of coming back to life,” concluded Axford.
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View the Global MarketView here