Singapore, Hong Kong amongst Asia’s biggest losers

Khalil Adis
Property Report

The Asian property investment market suffered an 83 per cent quarter-on-quarter fall in sales in the first quarter of 2009 with Japan, Singapore and Hong Kong suffering the biggest falls in sales volume, according to CB Richard Ellis (CBRE).

Preliminary data shows that Asia´s industrial property sector underwent the largest drop by market segment, plummeting 95 per cent from the same quarter a year earlier.

This was followed by office and retail property transactions which slid 89 percent and 40 percent respectively.

Singapore experienced further declines in investment sales in the first three months of the year with only a few isolated transactions as potential buyers and investors prefer to remain on the sidelines and adopt a wait-and-see attitude.

Total investment sales amounted to S$204.2 million, a decline of 51.8 percent from the previous quarter and a fall of 97.7 percent from the first quarter of 2008.

According to CBRE, the last time Singapore’s quarterly investment sales were at such levels was in the first quarter of 1998 when they stood at $49.28 million and in the third quarter of 1998 when they were $110.62 million.

In Hong Kong, institutional investment activity evaporated as investors continued to find it difficult to raise debt and equity.

However, the number of investment deals under HK$100 million and demand for first-hand residential housing units picked up considerably towards the end of the first quarter of 200.

This is due to several rounds of government interventions resulting in commercial banks gradually relaxing their requirements on property lending and lowering their mortgage rates.

The largest Asian transaction during the review period occurred in Japan involving the sale of Sogo Department Shinsaibashi Store building in Osaka where it comprises retail space for approximately US$383.6 million.

The commercial property markets in Japan and South Korea in particular, experienced tight lending conditions as investors in both markets found it difficult to raise equity.

This has resulted in an increase in inventory and decrease in overall transaction volume.

In Greater China, transaction volume remained low owing to the ongoing market slowdown and falling capital values.

In Thailand, there was little investment activity as bank financing remained difficult to obtain.

The Indonesian and Malaysian markets remained quiet, although they did not weaken as much as other markets around the region.

Meanwhile, activity in the Indian real estate investment market continued to slow under the impact of the global economic downturn.

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