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News Release


Real Estate Investors Active in Asia Pacific

China tops Asia Pacific with USD 5 billion worth of investment transacted in Second Quarter 2011while Australia emerges as top favourite with inter-regional investors

Sound domestic demand for real estate by occupiers and investors, combined with relatively strong corporate/household sector and high savings rates is expected to drive continued short term real estate markets’ performance to the remainder of the year, according to Jones Lang LaSalle’s August issue of the Asia Pacific Capital Markets Bulletin.

Investment volumes are up 11.1% y-o-y at USD 19 billion with domestic deals chalking up USD 11.2 billion alone. Cross-border Asia money accounted for USD 4.5 billion while inter-regional funds made up the total at 3.3 billion. Total investment volume is still targeted to reach USD 100 billion by end 2011.

Stuart Crow, Head of Asia Pacific Capital Markets at Jones Lang LaSalle comments “Investors who are interested in diversification of their portfolios are likely to be attracted to real estate in the region, based on cash flow from rent with the potential to keep pace with inflation. We have seen a series of institutional investors increase their allocations to real estate, sustaining market volumes.”

Australia emerged as a top favorite for inter-regional investors, as one of two AAA-rated countries in Asia Pacific, and drawn by good fundamentals of transparent real estate markets and economic links to the rest of Asia. Several sizeable deals with buyers from Canada, Switzerland, US and global funds pushed the total inter-regional inflow to Australia to USD 1.2 billion, a 442.1% increase y-o-y.

John Talbot, Head of Australia Capital Markets for Jones Lang LaSalle says “Our team advised on the sale of 50% of Northland Shopping Center in Melbourne which was sold to the Canada Pension Plan Investment Board for USD 484 million at a yield of 6.3% in May this year. This illustrated the level of interest by international investors in Australia, attracted by our strong growth prospects amidst a global slowdown.”

Last quarter, China recorded the largest volume of transactions in the region in 2Q 2011, at a shade over USD 5 billion (USD 3 billion of the investments from domestic investors). Historically Japan has usually been the biggest market, but for the first time China exceeded Japan in 4Q10. In 1Q11, Japan returned to the top spot as the year end pattern in Japan boosted volumes and this quarter China is again the biggest market for real estate investments.

“Domestic investors are continuing to play an important role in China investment market.  We recently  advised on the sale of Jia Rui International Plaza in Shanghai which was sold to SOHO China for approximately USD 294 million in August , which also  illustrated the level of interest by investors in office buildings in prime areas.” noted David Hand, Head of Investments for China.

In the long term, China’s role as the world’s second largest economy is likely to see the country become the biggest real estate investment market. Notwithstanding a swift and total recovery of the real estate markets in Japan, the rate of new building development in China, the continued rate of absorption of prime Grade A stock in Tiers I and II cities and the development of property rights to allow more landlord and tenant relationships, adds up to China destined to become the biggest investment market in Asia Pacific.

Commenting on regional outlook, Dr Megan Walters, Head of Capital Markets Research in Asia Pacific for Jones Lang LaSalle notes “In the long term, occupier demand for Asia Pacific real estate will endure based on population growth driving economic growth and urbanization. This provides an attractive stable income stream from rent for investors.”