This article is from the Australian Property Journal archive
SYDNEY and Tokyo have emerged as the most popular cities in Asia for investment, according to a Jones Lang LaSalle investor sentiment survey.
The survey found 48% of investors preferred Sydney and Tokyo and an overwhelming 76% expect to be net buyers to the Asia Pacific region in the next 12 months.
JLL director of international investments Simon Storry said Australia’s ranking in half-yearly Global Capital Flows research confirmed Australia remained a destination of choice for foreign investment, with cross-border investment in Australia increasing more than five-fold in 1H 2010 at $US1.8 billion compared with $US319 million in 1H 2009.
“We expect Australia to continue to be on the radar of foreign investors. Commercial real estate in Australia has offered solid and stable returns and an attractive environment for investors seeking stability in their globally diverse portfolios,” he added.
JLL managing director of investments and advisory John Talbot said whilst Sydney has been popular with investors, Melbourne also remains high on the list for offshore and domestic investors.
“However, the biggest single issue that remains is the lack of product in the market for buyers,” he added.
Talbot said in the Asia Pacific region confidence is growing and transaction volumes were on the rise.
“Deals across the region are becoming larger and more frequent as banks and investors alike compete for relatively few investment grade assets. During the most recent quarter, JLL has recorded a 14% increase in transaction volumes in the Asia Pacific region, driven by activity in Australia, Singapore and Hong Kong,” he continued.
Talbot said whilst investors seem fairly evenly distributed across the risk curve, one noticeable point in the research stands out: investors in Europe, the Middle East and Africa have a clear preference for core assets and prefer developed economies, reflecting their funds’ income return hurdles and structures.
In contrast, US based investors have a preference for ‘core plus’ and opportunistic assets in developing and emerging economies. Asia-based investors are mostly evenly divided between the four investment categories, with opportunistic assets being the least popular at 15%.
Investors also expect returns would continue to grow, with 11% predict returns to rise sharply and 63% expected returns to rise slightly. Interestingly, those who thought returns would be lower over the next 12 months, still expressed an interest to be a net investor, perhaps reflecting long-term confidence.
The outlook for the next 12 months is for the market to remain broadly balanced or to have an excess of buyers over sellers. Of those surveyed, 43% believe it will be a balanced market, while 39% indicated there would be more buyers than sellers, reflecting a cautious optimism in the Asia Pacific real estate market that is consistent with the respondents outlook that investment returns would be slightly higher over the next 12 months.
Australian Property Journal
