Investors Remain Active in Singapore and Hong Kong Markets by CB Richard Ellis

May 28, 2008 - PRLog -- Though highly leveraged investors have largely stepped out of the region’s investment markets due to the continued credit squeeze, core and core-plus investors remained active in many markets.

On the back of the region’s sound economic fundamentals and positive long-term outlook, as well as reasonably balanced supply-demand dynamics in many commercial property markets, financially-sound investors remained generally positive on the outlook for the investment market, though in certain markets some have adopted a “wait-and-see” approach.

As a result, the atmosphere was quite mixed in Asia’s major property markets, and investment activity in certain cities therefore eased from the peaks recorded in 2007, although the volume of investment activity still remained considerable.

Major Asian cities remained the focus of investor interest in the first quarter of 2008 on the back of the upbeat office market, where limited supply again exerted upward pressure on rentals. Prime office properties continued to be highly sought-after by investors, with both REITs and institutional investors making notable acquisitions, including the majority of the quarter’s ten largest investment deals. The combined value of the ten largest transactions was US$8.6 billion, with Mitsubishi Real Estate topping the list with its acquisition of the Resona Maruha Building in Tokyo for over JPY 162 billion.

Singapore’s investment market remained active, despite wider uncertainty arising from the instability of global financial markets. A total of S$8.50 billion worth of investment transactions were recorded over the first quarter. Property market investment activity was underpinned by Singapore’s positive long-term outlook despite the uncertainty of the global economic environment. Also, Singapore’s position as a financial hub and popular location for MNCs, as well as the reasonable equilibrium in supply-demand dynamics of the office market, are expected to sustain a healthy level of investment activity.

In Hong Kong, local investors were somewhat less aggressive in acquiring investment properties in the first quarter due to the prolonged stock market volatility. Notwithstanding the slight lull, the negative real interest rate environment and intact longterm trends are expected to prompt a renewed round of activity from financially sound investors, though more heavily leveraged players will be more likely to face increasing constraints. A noteworthy transaction in the quarter was Champion REIT’s acquisition of the retail, car park and certain office portions of Langham Place in Mong Kok for a total consideration of HK$12.5 billion. The seller was the REIT’s largest shareholder, Great Eagle.

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CB Richard Ellis provides coverage of the Hong Kong, China and Taiwan markets through a network of 12 principal offices, located in Hong Kong, Beijing, Shanghai, Guangzhou, Chengdu, Tianjin, Shenzhen, Hangzhou, Dalian and Taipei respectively. Since the business was first established in Hong Kong in 1978, the company has grown to become one of the leading International Property Consultants in Greater China.