Credit crunch and economic uncertainty have taken their toll on the global property market, with transaction volumes falling by 46 per cent in the first quarter, according to a property report.
Property sales figures of may and June show a fall in the sales in Asia indicating a slowdown. Drop in sales in US and Europe has become more severe.
Since September, the initial yield on acquisitions of commercial property has increased by more than 25 basis points in the Americas and by almost 40 basis points in Europe.Cap rates in Asia have continued to fall, reflecting both the growing wave of capital and expected upside for its emerging markets.
Nearly $56bn of major commercial property sales were completed throughout Europe, Africa and the Middle East in the first quarter. In a significant turn of events, Europe surpassed North America as the most active marketplace for property transactions. However, since this status was achieved while suffering a 40 per cent drop in sales compared to the 70 per cent decline experienced in North America, this victory could be considered pyrrhic. It may also be short-lived, as property sales in Asia are not far behind and are growing fast. Additionally, property sales in Europe are off to a very weak start in second quarter by plunging 71 per cent in April when compared to a year earlier.
ASIAThe region, which includes Australia and New Zealand, posted largely positive trends in the first quarter but is starting to lose some of its momentum. Sales of major commercial properties in Asia totalled $48.3bn in the first quarter, a 27 per cent increase from a year earlier.
The Asia investment market is also being weighed down by the economic uncertainties and adverse credit markets that have caused property sales to plummet in other regions of the globe.
The gains in the first quarter mask a gradual slowing in activity that has become evident. In 2007 the average monthly volume was about $19bn; in the first four months of 2008 it was about $14bn. Volume reported in March represented a 25 per cent decline from a year ago and April’s totals were even weaker. Less than $10bn of property sales were reported in April throughout Asia, a decline of 42 per cent.
Global market factors are certainly contributing to the slowing market, but new regulations on land deals instituted by China are also partly responsible, the report said. From October through January, auctions of major land parcels in China totalled more than $10bn each month, but since the new regulation, the monthly volume has sunk to $3bn.
There are still several dazzling growth stories in the first quarter of 2008. Property acquisitions in India and Vietnam in the first quarter were multiples of levels posted a year ago. Activity doubled in Malaysia and grew by 50 per cent in Japan. The office sector in Japan was very active in the first quarter culminating with the $1.55bn.
Despite the recent fall in land sales, total volume in China was still up 70 per cent in first quarter to equal $21bn. Sales in Hong Kong were flat in the first quarter, but a strong April has caused its market to be up 21 per cent year-to-date.
On the contrary, the sales volume in Australia and New Zealand has seriously decreased, by 47 per cent and 24 per cent, respectively. Both countries did poorly in almost every sector as a number of major listed property companies struggled with the high debt levels incurred from a binge on property in the United States, the United Kingdom and Japan in 2007.
The total volume in Singapore was down 36 per cent in the first quarter mainly due to the 85 per cent volume decline in the apartment sector as investors expect further weakness in housing; volume in the office sector still grew 18 per cent to reveal the strong demand of Class-A office.
Developed countries have seen property transactions fall by 25 per cent this year while acquisitions in the emerging markets are up a healthy 68 per cent. Emerging countries accounted for $102bn of property sales, representing 45 per cent of total volume in Asia.
Posts
No comments:
Post a Comment