Asia property market attractive again

By SONIA KOLESNIKOV, UPI Business Correspondent

SINGAPORE, Sept. 12 (UPI) -- Asia Pacific real estate is back on the radar screen of an increasing number of American and European property investors, according to a report released Thursday by Jones Lang LaSalle.

"Investment demand is being driven by two major motivators -- the opportunistic funds targeting growth assets in Asia, coupled by the relative transparency and low-risk profile of the Australian market," said Craig Williams, managing director of Jones Lang LaSalle Capital Markets.


Particular interest has been shown in the Japanese office market following signs of recovery across the country's property market since the late 1990s. Global investment houses have demonstrated interest in non-performing loans with real estate collateral, as well as J-REITs (Real Estate Investment Trusts), including Morgan Stanley and ORIX Asset Management.

Another hotspot has been the Seoul office market, which underwent deregulation in 1998. International interest has largely been coming from private equity funds, U.S. bank-managed opportunity funds and international insurance companies, the report said. This year has seen four major deals concluded by foreign investors, including LaSalle Investment management's Recovery Fund acquiring the Chokson office tower in Seoul. In addition, Morgan Stanley bought three office buildings for a combined price of about $81 million.


"Australia too has been the focus of increasing attention, particularly from European funds, although this is yet to translate into a large number of deals. This interest is likely to increase over time driven by the counter-cyclical benefits offered by the Australian market," Williams noted.

However, over the longer term, Williams did not foresee a return to the influx of foreign capital into the Australian property markets on a scale similar to the 1980s and 1990s by Asian and other foreign investors.

"Whilst international interest has not disappeared, it will be increasingly difficult for foreign investors to compete with domestic interests," he noted.

Indeed, as American and European investors show some interest in the region's market, so have Asian investors for investment in Europe and North America.

"We are seeing this trend increasing particularly in Australia with the small size of the market and the large volumes of capital entering the market as a result of employer superannuation contributions, demand which cannot be satisfied by the current level of available stock," said Williams.

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