Concrete Analysis | Overseas investor interest in Asia-Pacific region on the rise
Overall investment volume this year is expected to remain in line with theUS$98 billion record achieved last year
Asia-Pacific investors are becoming less risk-averse and more willing to move up the risk curve. Risk associated with property investment fell during the second quarter of this year, with the DTZ risk multiplier, a gauge of property market risk, now close to its record low before the global financial crisis.
At the same time, the second quarter saw renewed foreign interest in the region, with a record level of overseas investment. Private equity funds and institutional investors were particularly active. This led to buoyant investment activity across most markets, suggesting that the region is now in "risk-on" mode.
Commercial real estate investment (excluding land sales) in the Asia-Pacific region reached US$25.4 billion in the second quarter, up 9 per cent from the first quarter. This took investment volume in the first half to US$48.8 billion, up 3 per cent year on year.
Australia saw a surge in investment - 102 per cent quarter on quarter to US$8.2 billion - in the second quarter and reaching its highest level since the fourth quarter of 2007. This was underpinned by the takeover of Commonwealth Property Office Fund by the Canadian-based CPPIB and Dexus A-reit.
South Korea stands out as a new hot spot in the region, with investment rising to US$2 billion in the second quarter, the highest level in two years. Foreign private equity funds and institutions were most active, attracted by relatively stable market fundamentals and attractive risk pricing characteristics.
The Greater China region, comprising the mainland, Hong Kong and Taiwan, experienced a 66 per cent rise in investment in the second quarter.