According to CBRE Research Asia, Asian real estate investment markets had a strong recovery in the second half of 2009 after facing a difficult start to the year.

In its latest report, it noted that “direct real estate investment in Asia jumped 56 per cent year on year in the second half of 2009 to an estimated US$25 billion.”

A large part of the recovery was seen in Greater China. China, Hong Kong and Taiwan accounted for 57 per cent of the total investment volume in Asia in the second half of 2009. The report also noted that “the US$15 billion worth of transactions completed in Greater China during the review period was 169 per cent higher than the amount recorded in the corresponding period in 2008.”  

Similarly, Japan, Singapore and Korea also registered a strong rebound in investment activity in the second half of 2009. These countries accounted for 17 per cent, 9 per cent and 8 per cent of the total volume respectively.

The report added that “investment activity was largely driven by domestic and intra- regional investors, which accounted for 83 per cent and 15 per cent of total volume respectively.”

Prime office properties attracted the most interest, registering over US$10 billion of investment in the second half of 2009, 41 per cent of the total volume recorded. Prime office properties featured in eight of the ten largest transactions that took place

during the period.

Residential properties accounted for 20 per cent of total transaction volume, while

the retail sector made for 16 per cent. Industrial properties also rebounded strongly in the second half of 2009, gaining some 155 per cent compared to the first six months.

“Local buyers and domestic real estate funds dominated transaction activity in the

second half but the period also saw a small number of core international institutional investors return to the Asian property market,” said Andrew Ness, Executive Director of CBRE Research Asia. “Investment volume and prices across most sectors, particularly in the residential and office markets, have increased considerably. However, there are concerns that a number of residential markets appear to be in the early stages of transitioning from a state of recovery to a situation where they are in danger of overheating due to the high liquidity and a surge of capital inflows to the region.”

Looking ahead, the report added that “Asian governments can be expected to gradually adjust their monetary policies and impose certain policy measures to tighten property lending as they look to prevent the formation of a new asset bubbles.” In light of the sharp market recovery, “core international institutional investors will face the limited availability of stock and deal flow as property owners remain generally reluctant to reduce their asking prices.”