A report by APREA and Ferguson Partners Ltd found that global investors are more bullish about Asia's prospects in 2013, and are preferring to invest in the region rather than US or Europe.
Global real estate investors are more excited about investment prospects in Asia for 2012 and 2013, with many expressing keen interest to invest in commercial properties here rather that in US - where recuperation has been slow - or Europe, which is still lagging behind on account of the eurozone crisis.
This was the conclusion of a new research paper published by the Asia Pacific Real Estate Association (APREA) in partnership with global executive recruitment consultancy Ferguson Partners Ltd.
For the paper, APREA and Ferguson conducted one-to-one interviews with regional industry leaders and global investors, gleaning their insight on expected capital flows into Asia as well as their outlook for regional market performance.
The experts said that US and European capital sources seemed ready to restart investments into selected cities and property sectors after a recent hiatus. Destinations expected to be popular with investors include Japan, China, Singapore, Australia and Indonesia. However, the returning capital flow would be well below the tremendous pace seen just prior to the 2008 global economic crisis, noted the report.
China seems to hold a crucial role in the region, as the outlook for the country will dictate real estate investment appetites in all adjacent countries. With gross domestic product growth pegged at 7.5% for 2012, return-starved institutional investors are increasingly turning towards the Mainland in order to escape the lacklustre US and European markets.
"Right now, China is dictating the appetite for investments in the entire Asia-Pacific region," said Peter Rackowe, Senior Managing Director of Asia for Ferguson Partners Ltd. "Despite the great interest in China, the real estate leaders in that region are exercising caution and restraint, as they harbor doubts about how long China's leaders can keep the current pace of growth and when the current growth will begin to normalise."
The report also detailed other findings, among which is the rekindled interest in the Japanese market. In contrast to China, Japan appears to be a defensive, safe and income-oriented investment destination, with a brightening outlook for Tokyo.
Although deal making and liquidity available for transactions remain a challenge, the Tokyo market should welcome capital infusions in the aftermath of the 2011 quake. The J-REIT sector is also expected to see heightened activity, which will provide good cash flow for investors. Logistics and retail - especially the retail leasing market - are favoured sub-markets.
With greater transparency and more reliable legal systems in place, Singapore and Australia were highlighted as good alternatives to China for investors sensitive to risk.
Tags: Commercial real estate, Business space, Investment properties