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Deals for office properties in Asia Pacific increased 12 percent to US$15.7 billion (S$19.7 billion) in Q2 2014, with the rush for office assets seen in most of the region’s core markets, revealed a Cushman & Wakefield report.
Notably, about 40 percent of the deals were driven by foreign capital, which reached US$6.2 billion (S$7.8 billion), or the region’s highest since the financial crisis.
“Despite the prospect of yield compression, core assets in gateway markets remain an attractive proposition as they provide a safe haven and a stable stream of income, particularly for pension funds and insurers. It also hedges against inflation, which is expected to accelerate as economic activity picks up in the US and Europe,” said Sigrid Zialcita, Managing Director of Research for Asia Pacific, Cushman & Wakefield.
The report noted almost 50 percent of the cross border office transactions were bound for the Australian markets.
“These were mostly dominated by investment funds, including private equity and pension funds, and REITs, which contributed over 60 percent of the funds invested,” it said.
Led by private equity giants Blackstone Group and KKR & Co, investors from the Americas were the region’s top contributors of foreign capital, ploughing in approximately US$3.4 billion (S$4.3 billion).
“Hong Kong investors were the next most active, due to significant deployment of funds by private equity firm Gaw Capital,” said the report.
The Australian office market posted its highest quarterly investment volume ever at US$6.5 billion (S$8.2 billion) in Q2 2014, while South Korea recorded the second highest cross border investment in the region with over 69 percent of investments coming from foreign investors.
Although investment figures for the region’s office assets shone, volume was still down from the previous year.
The region’s overall investment volume stood at US$85.3 billion (S$107 billion) in Q2 2014, down 35.6 percent over the same period last year, said Cushman & Wakefield.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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